Can My Company Pay for My Car?

<p>You have found the car you want.</p><p>You use a car for work.</p><p>You have a limited company.</p><p>So naturally, you think: <strong>"Can I just put the car through the business?"</strong></p><p>Possibly.</p><p>But this is one of those situations where "the company can pay for it" and "this is a good idea" are not always the same thing.</p><p>The car you choose can make a huge difference.</p><h2>When could putting a car through the company work really well?</h2><p>Imagine you are a company director and you have been thinking about getting an electric car.</p><p>You will use it to visit customers and suppliers, but you will also use it at weekends, take the children out in it and drive it personally.</p><p>Your company buys or leases the car and you have use of it.</p><p>Because electric company cars currently receive much more favourable Benefit in Kind treatment than many petrol or diesel cars, this can sometimes be a really attractive option.</p><p>You get the car you wanted. The business covers the cost. There may be tax advantages for the company too.</p><p>You will still need to consider the personal tax that comes with having a company car available for private use. With the right electric car, the numbers can stack up really nicely.</p><p><strong>Please do not take that as a blanket "electric cars are always better through the company". Speak to your accountant before you commit. What works brilliantly for one director might not be the best option for another.</strong></p><h2>Now imagine exactly the same situation with a different car</h2><p>You have spotted a large petrol SUV. It is £60,000. You love it.</p><p>You use your car for work, so putting it through the company feels like the obvious thing to do.</p><p>Except the tax calculation for a company car is not based simply on how much of your driving is for business.</p><p>Things such as the car's value and emissions can have a big impact on the Benefit in Kind.</p><p>That can mean you personally end up paying tax for having the car available to you, while the company can also have additional costs.</p><p>Suddenly that £60,000 company car might not look nearly as attractive as it did in the showroom.</p><p>In that situation, buying the car personally and claiming for your genuine business mileage could potentially make much more sense.</p><h2>What if I just buy the car myself?</h2><p>That can be the right answer too.</p><p>Let's say you already own a perfectly good car personally.</p><p>You drive to see customers, attend meetings and make other genuine business journeys in it.</p><p>You do not necessarily need to move the car into the company just because you now have a limited company.</p><p>Instead, the company may be able to reimburse you for qualifying business mileage.</p><p>For some business owners, that is by far the simplest solution.</p><h2>So which option is best?</h2><p>This is the slightly annoying accountant answer: <strong>it depends.</strong></p><p>But it really does.</p><p>Take two business owners who both want a £50,000 car. One wants a fully electric model. The other wants a higher-emission petrol model.</p><p>The cars might cost roughly the same to buy. The monthly payments might even look similar. But the tax position could be completely different.</p><h2>Speak to us before you go car shopping</h2><p>Well… maybe you can go car shopping first.</p><p>Just <strong>please speak to us before you sign anything</strong>.</p><p>If you send us the details of the car you are considering, we can look at the numbers and explain the options.</p><p>That is a much better conversation to have before you have committed yourself to several years of payments.</p>