Should I buy a car through my company?

There's no absolute answer to this question, according to Accounting Technician Jessica Maddams. It's a matter of your individual circumstances and doing some calculations.

Many company directors ask the question: 'Are there any benefits of buying a car through the company?'

There are a few things you will need to take into consideration when making this decision.

• You would be personally liable for benefit-in-kind tax for the availability of a company car and fuel for private use. You can use HMRC's benefit-in-kind tax calculator to work out how much this would potentially be. You will need to know the cost price of the car, the C02 emissions and fuel type. This information can be found here: Tax on company benefits: Tax on company cars - GOV.UK (www.gov.uk)
• The benefit-in-kind tax would be reduced if the car were only available to you for some of the time, if you make any contributions towards the cost or if the car has low C02 emissions.
• The company would be liable for the employer's NI on the value of the benefit.

These rules would apply whether the company had purchased the car or leased it.

As a result, it is usually more beneficial for you to purchase or lease the car privately and then claim mileage through the company. To do this, you would need to record your business travel, excluding your daily commute to the office. You can record the occasions when you could be visiting clients, collecting goods from suppliers, travelling to training courses and so on.

You would need to keep a record of the mileage for each journey and then claim the cost back from the company using HMRC's advisory mileage claim rates. These currently are set as 45p per mile up to 10,000 miles, and then 25p per mile for anything over this figure.

If you choose to use this method, then you would need to pay for all the vehicle expenses yourself, such as repairs and servicing, insurance, road tax and fuel.

If the car is solely for business use, (you're a driving instructor, taxi driver or supplying self-drive hire cars), then the above does not apply, as the car would have no private use and therefore no benefit in kind.

For more information and advice, call our team on 0115 955 5500 or email enquiries@pagekirk.co.uk.