Originally written by John Miller on Small Business
This is not a simple topic and is dependent on a number of factors, such as the type of vehicle you wish to buy.
As a sole trader, I would recommend buying the car yourself. The benefits of buying a car through your business are limited.
If your company buys a car, and a loan is taken out to purchase the vehicle or if it’s on Hire Purchase, only the interest payments are an allowable company expense.
If you buy a van, buy it through your company. Vans are classified as plant and machinery for tax purposes. As such, they qualify for 100 per allowances under the Annual Investment Allowance regime. This means you get a deduction for 100 per cent of the cost to reduce your company’s taxable profits.
>See also: 8 business van financing tips for your SME
Quirky as it might sound, motorbikes are also not a car, so get the same regime as vans.
Either way, if you’re going to buy, consider buying electric.
With cars and vans, you can charge your company a reimbursement expense of 45p a mile for the first 10,000 business miles that you travel in each tax year and 25p per