Consultant - Car Tax

[johnnymac1971]

I have recently left full-time employment and have set up as a consultant (Property Investment) I am not intending to operate this consultancy via a limited company but effectively as a sole trader.

I need to buy a car (my previous transport was a company car) because I cannot do this job without one.

My question is this:
Are there ever situations where I may be able to claim the cost of purchasing this car against tax (or writing off an element annually). If I was not doing this job, I would be able to survive without one (my wife has a run around that is fine but she needs it during the day). I am adamant that this car is not a perk in any way shaoe of form and over 90% of the mileage I will cover will be business mileage.

What are my options here?

Thanks

[hashman]

You are entitled to claim for the business proportion of your motoring expenses. In addition you are entitled to capital allowances based on cost of car - maximum of £3,000 pa again scaled down to business use - 90% = £2,700. In other words, this amount would be deductible in arriving at your taxable profits. If the car costs less than £12,000 or once its value for tax is written down to less than this amount you get 25% allowance (scaled down to business use).

Alternatively, and assuming your turnover does not exceed currently £60,000 (VAT registration limit) you can claim 40p a mile for the first 10,000 business miles and 25p a mile thereafter. But no capital allowances because they are included in the 40/25p

[tax me less!]

Is this a case where it would pay to be VAT registered so as to claim back the input VAT on the car?

[johnnymac1971]

Thansk for these comments

I am intending to become VAT registered before getting the car - can I claim any of this back?

Thanks for your help - it is much appreciated

[Lambs]

J,

There are special rules regarding the claiming of Input VAT on cars, where there is, or may be, an element of private use. Effectively, the claim to Input VAT is blocked. This would almost invariably be the case, for a sole trader.

There are further rules, especially for leased cars, which make them more attractive, at least from a VAT perspective.

You should refer to VAT Notice 700/64 for further information.

It would be very much in your best interests to consult with a suitably qualified professional, before embarking on your business venture. There is a lot to consider, (more than just tax), and you should ensure that you obtain the best 'vehicle' for your new business venture, be in unincorporated or otherwise.

It is particularly important that you obtain excellent advice to the application of VAT to property, if you are inexperienced in this area. (And maybe even if you are!). This can be a tortuous area of taxation.

Regards,

Lambs