Can I recharge Car loan interest

Can I recharge Car loan interest

Didn't find your answer?

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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Portia profile image
By Portia Nina Levin
24th Apr 2015 16:09

(No subject)

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By Bungo
16th Apr 2015 14:18

45p per mile
Your 45p a mile is intended to cover all the car related costs.

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Stepurhan
By stepurhan
16th Apr 2015 14:25

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.

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Replying to Red Leader:
By Bungo
16th Apr 2015 16:43

it wasn't a hard question

AJW49 wrote:

 

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.

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By johngroganjga
16th Apr 2015 14:27

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.

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By madhumorjaria
16th Apr 2015 14:28

No

The rate set by HMRC for mileage cover all running and financial costs

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Portia profile image
By Portia Nina Levin
24th Apr 2015 16:10

(No subject)

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Replying to silverghost:
Stepurhan
By stepurhan
18th Apr 2015 21:17

Almost

Portia Nina Levin wrote:

That my initial response was perfectly adequate? Or is it synonymous saying hour?

You forgot to tell them to get an accountant. ;-)
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By DMGbus
16th Apr 2015 16:39

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.

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Replying to scrasey:
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By AJW49
16th Apr 2015 15:42

 

 

Thank you DMGbus.

Very informative. Having been self employed I have, as you final paragraph explains, benefited  buy using that method. I had just wondered if there was a similar method available as a Director / employee of a Ltd company.

Many thanks you have answered my query.

 

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