Sole trader - lease a new car or claim expenses on family car

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Learner2015

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All, a friend was asking me what the best approach here would be. Would appreciate your input.

They are a sole trader and don't do much mileage. Currently claiming mileage expenses when they use the 5 year old family car.

It was mentioned to them that they should lease a new car as they could claim all the payments as an allowable expense?

If they keep going the way they are can they apportion the cost of insurance, tax, running cost and claim that as an allowable expense?

Re the lease, without considering whether they should buy a new car, is it generally better for a sole trader to lease a car or claim mileage on a private car?
 
Learner2015 said:
They are a sole trader and don't do much mileage. Currently claiming mileage expenses when they use the 5 year old family car.
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Good God, they can't do that. Mileage expenses aren't allowed for sole traders.

They need decent tax advice, urgently.
 
Glad I posted however they are seeing a tax consultant at the end of the month. They just want to know the basics before they go in so they don't waste costly advice time on understanding the basic stuff.

So what motoring expenses can a sole trader claim, anything?
 
They should worry less about skimping on "costly advice time" and more about the far more costly consequences of not adhering to the basic rules. Revenue will throw the book at them for claiming mileage if they rumble it. Only receipted costs actually incurred are considered for allowability in the first instance and after that there are several hoops to jump through.
 
Ok thanks TMcGibney, receipted stuff only, so they would need to have a Company and be Directors to go the other route then yes?

On my original post relating to leasing a car - can a sole trader claim anything on the lease payments?
 
Small mileage + company car = high benefit in kind tax.

Bik tax is on the original value of the car even if its 5 years old, so unless you are doing high mileage (40,000km+) its not worth it.

If you have journeys directly to do with the business (not driving to and from main place of work) you may be able to claim mileage.
 
Learner2015 said:
On my original post relating to leasing a car - can a sole trader claim anything on the lease payments?
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Technically possible but in the example you gave, almost all will be disallowed on foot of private use and all the extra hassle and risks won't be worthwhile.
 
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