Forum

• # 83067
• Wed 06 Jun 2012 06:36 PM

Hi I have a sole trader client who runs a works van, which is fine.  The only problem is that that a client of his (an accountant) has persuaded him that the cost of the new family car which he has just purchased can be totally written off against his tax bill.  The family car is used for some company business but is mainly a family run around.  I have explained to him that I do not know of any way this is possible and that the most he will be able to claim is mileage and expenses.  Am I missing something here or as I suspect, the client has been totally mislead?  I would really appreciate some help on this as the client is accusing me of not knowing my job!
Many thanks
Nikki 

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• # 83073
• Wed 06 Jun 2012 08:47 PM

If he has a works van why does he need to use the family car for some company business? Why doesn`t he just use the van for all his business use? It would be a lot more straight forward.

I have sole trader clients who don`t have a business vehicle and for them they claim 45p per mile for 1st 10,000 miles and then 25p for each mile thereafter when using their family car for business. Using this method you can`t then also claim other vehicle expenses, they are all covered by the 45p per mile.

Steve

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• # 83077
• Thu 07 Jun 2012 07:30 AM

Hi Nikki,


It all comes down to what the HMRC says about business expenses, that they MUST be "wholly and exclusively" for the business. Using the new car to run the family around is obviously a personal expense and it was bought for that purpose.


As Steve says, if he does use the car for some business mileage then he will need to keep records of his business mileage and claim back 45p per mile for the first 10,000 business miles then 25p per mile for any business miles above that.  


He MAY be able to apportion some of the cost of the car (the business portion only), but definitely not the whole cost. But if he does this I'm not sure he can then claim mileage because that is usually for personal cars used for business.


    

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• # 83078
• Thu 07 Jun 2012 07:38 AM

You've got two options with cars: either claim the mileage OR claim the proportion of actual costs incurred relating to business use of the vehicle. So if it's used for 10% business, then he could claim 10% of the amount actually spent on fuel, insurance, cost of the car etc.

But once you choose an option - mileage or actual costs - you have to stay with that option and can only change when you change vehicle.

Mileage generally works out to be preferable unless you travel a lot of miles, but it might be sensible to calculate both options and confirm which is better. 

• Ruth
  www.shoreaccounting.co.uk

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• # 83080
• Thu 07 Jun 2012 08:09 AM

Thanks everyone for your help, it is as I suspected, I just doubted myself for a moment.  I think the family car is used to make initial visits to client's, it gives a better impression then turning up in his battered works van.  It is also used by his wife for collecting spares etc on his behalf.  If the client protests then maybe I should ask which accountant gave him the misleading information. Thanks again.
Nikki

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• # 83083
• Thu 07 Jun 2012 09:00 AM

Hi Nikki,

Probably, the accountant is talking about 100% First Year Allowances  for new unused cars with CO2 emission of less than 110g/km. 
http://www.hmrc.gov.uk/helpsheets/hs252.pdf

Kind regards,
Flora

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• # 83099
• Thu 07 Jun 2012 06:46 PM

Let us know what happens with this one Nikki, would be interesting to hear how it pans out.

• Andrea Blake AICB CB Cert. PM Dip.
  www.approachaccounting.co.uk

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• # 83140
• Mon 11 Jun 2012 12:22 PM

gigagirlsaid:

“Let us know what happens with this one Nikki, would be interesting to hear how it pans out.”

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