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196 – Should you run your business car privately? Or through the company?

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7 May 2009

Peter Edney, accountant, at his office

Peter Edney: advising client to run a new car through his company

Conversation with accountant Peter Edney

Had an interesting conversation with my landlord – Peter Edney – this morning.

Peter is an accountant with a healthy interest in cars (he runs an 11-year-old Mercedes SL V8). One of his clients has a new car coming – and quite rightly the client is getting very excited by the prospect.

Up until now, the client has run their car privately and charged business mileage using AMAPs back to the company – his own business. The client’s mileage is nearly 22,000 miles a year.

But Peter’s done some quick calculations to suggest this will no longer be so tax-efficient. And reckons his client should run the car through the company books.

“I’ve run some quick figures,” Peter told me, “and I reckon my client would be better off putting the car through the business. The cost to my client to run it personally is about 90% of his salary; running it through the business costs him 30%. OK, the company suffers the depreciation, but it can deduct running costs and a proportion of the lease as it was ordered before April 1. It’s something of a no-brainer!”

Quite. Although each circumstance is different. You should always work through the details both with your accountant and leasing adviser to find out which is best for you and your company.

Certainly with the changes to the expensive car leasing disallowance, which came into effect from April 1 (April 6 for self-employed and partnerships), leasing a car through the business is looking highly attractive. Which is why it’s always worth challenging your previous decisions to ensure they still work. Effectively.

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Ralph Morton

Ralph Morton

Ralph Morton is an award-winning journalist and the founder of Business Car Manager (now renamed Business Motoring). Ralph writes extensively about the car and van leasing industry as well as wider fleet and company car issues. A former editor of What Car?, Ralph is a vastly experienced writer and editor and has been writing about the automotive sector for over 35 years.

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