I am a director of my own Ltd company and also the sole employee.
I privately purchased a car on finance and 60% of use is for business. I personally repay the finance if full with no recharge to my ltd company.
I claim mileage rate for all business miles at 45p per mile. I do not claim capital allowances as it is not a company asset.
My question is, Is it possible for me to charge the interest incurred on the loan, based on the % of business use, as an expense to my Ltd company?
Thank you in advance for any help.
Tony
Replies (10)
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Not a business asset
So why would it be a business loan?
That the two should go together is a fundamental accounting principle. You may be making many other errors you aren't even aware of. Get an accountant before you get yourself in hot water.
it wasn't a hard question
It's not a business loan. Think you have misunderstood the question
I am pretty sure nobody misunderstood your question, why do you think that? It was a pretty straightforward question and indeed answer.
Agreed. Or to put it another way, the 45p is what you are entitled to charge the company for its use of your car. The loan interest is part of the cost you are incurring to acquire the car so that you can charge the company 45p a mile for using it. If you charged the company both 45p a mile and the loan interest that would be double counting.
Almost
You forgot to tell them to get an accountant. ;-)That my initial response was perfectly adequate? Or is it synonymous saying hour?
Interest claim on mileages changed in 2002
Employees did used to be able to make a claim for the interest element of business mileages on top of the set rate per mile until 5 April 2002. The claim was a s198 claim to HMRC for tax relief on a proportion of the interest paid.
So original answer of "no" was correct. The additional information that I provide in this reply explains how a misunderstanding could arise for the OP, in fact I believe some advisors are unaware of what I state below:
However, purely for completeness, had it been the case that the individual was self-employed [which they are not] then in their accounts they would be eligible to recover the 45p per mile plus an element of the loan interest against profits.