Director Company Car and Van

Laura8192 Registered Posts: 95 ? ? ?
I have a new Limited Company client, his previous accountant created a separate set of accounts for him as a sole trader, and put both vehicles (a van and a car) through this "sole trader business".

I have advised that this is not right, it is tax avoidance and HMRC would likely take the same view as me, but now I am not sure what to do about the vehicles.

HMRC guidance on Company cars all states if the director/employee earns more than £8,500 there is a tax charge to having a company car, does this mean as my client will only earn £7,680 (£640 a month), that there is no tax charge to having a company car?

If I put them through as private vehicles, my client can of course claim 45p a mile, but he wants to keep them as company cars if he can....


  • MarieNoelle
    MarieNoelle Moderator, MAAT, AAT Licensed Accountant Posts: 1,369
    HMRC states:

    "Company directors - usually form P11D
    Use form P11D for almost all company directors. Only use form P9D if all of the following apply:
    they earn at a rate of less than £8,500 per year
    they have no material interest in the company - see below for explanation
    they are either a full-time working director or a director of a charity or non-profit organisation
    In broad terms, a director has a material interest in a company if (alone or together with associates) they own or can control more than 5 per cent of its ordinary share capital."

    Also remember that the £8,500 rule includes the benefit in kind, not just the salary.
  • Laura8192
    Laura8192 Registered Posts: 95 ? ? ?
    Thank you for your help.

    So would my client be better to claim 45p a mile, as having a car and a van would result in a high benefit in kind I would think? The car and van are both over 10 years old I would say.
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