I have touched on this topic before but have some clarity on the scheme and need help on what can be claimed against trading income.
My client is employed by local health trust. The trust operates a leased car scheme which works as follows:
- Contract for car leasing is between trust and car leasing company
- Employees who can avail of scheme are provided with leased car
- Each month, a deduction is made from employees net pay for their private usage of vehicle
- Employee pays for all fuel costs
- Employee claims monthly mileage for work travel only at 11p per mile, a much reduced rate
- The lease runs for 3 years
- Employees who leave within 3 years must pay early termination charge to lease company
My client also runs a part-time business and the vehicle is used for the business too. In relation to my client's tax return, the client has recorded fuel spent for business purposes only so I propose to claim 100% of this on the tax return. Apparently the car insurance is part of her monthly net pay deduction.
What other costs (i.e. car leasing or capital allowances) can be claimed? I guess no CA's are available as it is leased. But if lease contract is between trust and car lease company, surely this is a P11D item anyway? Can I claim a percentage of the monthly deduction from her net pay as being related to her business or do I need to get a more detailed breakdown of this deduction (i.e. between lease element, insurance element)?
Also, can she claim the extra 34 pence per mile as employment expense on her tax return?
All advice and answers greatly appreciated.
Replies (1)
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I have one too
This is almost certainly a salary sacrifice scheme. Your client will get a reduced salary and provided with the car as a benefit. Yes there should be a P11D.
The reduced mileage rate is the fuel only rate. You can't claim the difference up to 45p because the employee doesn't provide the car, the trust does.
Your client should have ensured that the insurance cover includes the self employment.
Good luck with claiming any of the cost as a s/e expense because the employee doesn't provide the car.