When it comes to company cars, we often are asked ‘can my limited company pay for my car’? The answer is usually, YES…
But it is not tax efficient.
We therefore tend to steer clients away from doing this and claim a mileage allowance. Set at the HMRC approved rates, and claimed back from the company for using a private car for business journeys.
Where this could change shortly is the use of very low emission cars and/or electric powered vehicles. From 6th April 2020 the new rules mean that depending on the emissions from your car, the ‘benefit in kind’ rates can be as low as ZERO, with electric not counting as fuel, further reducing your benefit.
Couple this with a ‘capital allowance’ that can allow you to offset 100% of your new vehicle against your corporation tax in the first year. That new Tesla is looking more favourable all the time….
If you are thinking of changing car and looking for tax efficiency – consider electric and chat to us.
Important note: Hybrids are slightly more complex on the fuel benefit issue – have a chat to us.
Additional note: For the self-employed the capital allowances still apply, so still worth considering.