As a self-employed individual, have you ever wondered whether you can expense the purchase cost and maintenance of your car? If you answered yes then this post is for you. Read on for five taxation must-knows when it comes to your motor.
1. Yes, in almost all scenarios the purchase of a company car is a tax allowable expense.
2. In most cases, however, the tax allowable expense will not be for the full purchase price. Typically, an annual deduction is made based on a given percentage (the standard rate is 18%) of the car’s value.
3. You cannot claim that a car is used for business purposes when driving to and from work. Here’s a quick list of what you can and can’t claim:
- vehicle insurance
- repairs and servicing
- hire charges
- vehicle licence fees
- breakdown cover
- non-business driving or travel costs
- travel between home and work
4. As you can see in the non-allowable expenditure, you cannot claim non-business use. If you use the car for personal as well as business use, you must apportion the value and related expenditure accordingly. For example, if you use the car for 50% business purposes, only 50% of your fuel cost will be an allowable deduction.
5. Business leasing is often cheaper than personal. Okay so this isn’t really a question of allowable expenditure for tax purposes but we felt it was worth chucking in. We won’t bore you with the details here but if you’re looking to lease a car and can do so through your business, it might be worth checking out.
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