Future Sole Trader/Ltd Company starter needs a vehicle

[jonesy]

Hi there, this is my first post. Im totally new to this but i have been reading various posts.

I am thinking of starting a company (sole trader/ltd.not sure yet) and need a vehicle to travel to clients. People have said that they can lease a car and claim the repayments and other costs on their business/company expenses.

To my understanding, if the vehicle in question is worth £12,000 or under then the expenses are 100% deductible. Furthermore, if you are a Sole Trader then you are allowed to claim 100% of the payments for petrol, repairs, mot/services, insurance and any other business expenses "wholly and exclusively" for business purposes.

My questions are, is this all this correct? And if so, how can it be achieved?

What forms (if any) would you need to fill out on your tax return?

If you filed an expense claim form after April, when would you receive the re-imbursment of funds?

Thanks in advance

[Indizine]

Moved to the accounting forum

[James Smith]

Putting a company car into a limited company is normally a very expensive option as you would be taxed on it as a "benefit in kind", however as you say you are "thinking of starting a company", I imagine that you will decide not to form a limited company from the start, that is to say you normally start as sole trader, prove the business model and incorporate if things work out for you and you are making enough money to warrant it. (Obviously this depends on your circumstances, but I don't have much to work with here!)

As far as sole traders go yes you can claim a share of the running costs, however you have a choice for a small business in that you can also elect to simply claim 40p per mile business mile (up to 10,000 miles) which unless you have a new car is usually the best thing to do.

Leasing is very risky for a start up, not to mention the sheer cost of such a luxury as a brand new car, so I would avoid it. If you have little cash, the last thing you want to do is commit to £10-15k of costs.

I hope that gives some pointers.

Regards,

[jonesy]

Thank you for your reply James.

I understand vehicles a Ltd company owns would be classed as a 'benfit in kind' and incur taxes ect.

OK. So the 40p/Mile is the better option to start with.

What I am more interested in and cannot seem to find a definitive answer to is:

What forms (if any) would you need to fill out on your tax return when claiming 40p/Mile?

If you filed an expense claim form after April, when would you receive the re-imbursment of funds?

[James Smith]

Jonesy,

There are no specific forms to fill in. For your own records however you would need to keep a log of business trips. ie date, from where to where, number of miles. You can put this together using post codes and something like the RAC route-master website without too much bother if you have a record of your journeys. The total of this is then entered onto your tax return.

I hope that helps

[jonesy]

thank you for your prompt reply

It looks like the 40p/Mile is the way forward then. I will keep a log of all business miles made.

Slightly off the subject, I am currently working for a Ltd company. How would I claim my business mileage expenses if my company fill out my tax return?
What affect would a company dispensation have on my expense claims?

Lastly, how long would it take the government to pay back the expenses claimed?