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Car in the Company or Not?
Newsletter issue - October 07.
Whether you or your company should buy your next car depends on many factors including the cost the car, its CO2 emissions rating and the level of your business and personal mileage. When you own the car personally, the company can pay you a tax free mileage allowance of 40p per mile for the first 10,000 business miles per tax year, and 25p per mile for additional journeys, but this allowance may not cover the vehicle's running costs and so you may be tempted to put the car into your company.
If the company owns the car it can claim a tax deduction for all the running costs, and claim an annual capital allowance to provide tax relief for the purchase cost. Currently the capital allowance is 25% of the cost of the car, restricted to £3,000 per year for cars that cost £12,000 or more. From April 2008 the allowance is likely to be 20% of the cost for cars with a CO2 emissions rating of 165g/k or less, but only 10% for more polluting cars. Cars with CO2 emissions of 120g/k or less qualify for a 100% first year allowance and will continue to do so. These changes mean it will take longer to get full tax relief for the cost of cars that have higher CO2 emissions ratings, making them more expensive for the business to buy. The cost of leasing more polluting cars will also be affected from next year.
However, when the company owns the car you pay a tax charge for using the car privately. When you buy your own fuel the company can pay you a fuel rate for business miles driven, which also changes with the petrol prices. If you give us all the facts we can help you calculate what is best for you.
What our clients say about us...
"Paul has provided accountancy services to my company for 2 years now. I can recommend Paul very highly; his skills as an accountant are highly detailed and professional and he is always available to provide advice. One aspect of the way Paul works that I greatly appreciate is a preference to meet face to face when there is a detailed conversation to be had. I personally find this more productive and is a benefit of working with a small accountancy firm that you wouldn't get with the large faceless providers."
ALISTAIR FAIRWEATHER - PROGRAMME & PROJECT MANAGER, DELIVERING/RESCUING I.T. 7 BUSINESS CHANGE WITH BUDGETS UPTO £50M INC SUPPIER MANAGEMENT
"I couldn't ask for more from Paul as an Accountant. Paul has been accountant to Work Relief Charity Recruitment for just over a year now and is proving an invaluable asset. Accurate, knowledgeable, flexible with an emphasis on service delivery, I would recommend Paul's services to any organisation looking for an accounts professional."
Neil Price - Managing Director at Work Relief Charity Recruitment
"Paul was a referral from a family member when I started my business 2 years ago. As this was the first time I had ever run my own company I was totally clueless over the financial side of matters and was worried that I may have made mistakes in any of my accounting. I needn't have worried as after enaging Paul for a set monthly fee he was always there on the end of the phone for all sorts of questions I had and no matter how trivial they were Paul gave me all the information I required and more and did an excellent and painless job at the end of my first year! Couldn't ask for any better to be honest. Just two words - hire him!!!"
Lee Westrap MBCS - Director - Bulldog IT Services
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