I am a sole trader doing 25000 business miles a year. I intend to buy a new car for, say £20k, but keep the old car, worth say £4k, and use both of them to spread the mileage out to avoid heavily depreciating the new one.
Q 1. Can I use actual costs, apportioned for business mileage, for the new car but use the 'FPCS' 40p & 25p rates for business miles in the old one? Or must I use the same method for both? My business use will be a genuine 80%+ of total mileage for both cars.
Q 2. If my wife has private use of both cars for, say, 10% of the mileage and she gets paid a £4500 salary as a p/time employee will she get taxed on both of the cars as a benefit in kind? (At present she has her own car which we could get rid of)
A.Wheeler
Replies (2)
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assuming you are under Vat threshold
Q1 - in principal you can use the different basis for each vehicle, but once chosen you can't change, so for example you are stuck using the same basis for the old car as you did last year.
Q2 - I think she does if in total she exceeds the £8,500 limit for salary & benefits. You have to work out the potential tax benefits on each car but apportioned I think for actual use.
Seems all very complicated, couldn't she just use her own car and claim AM rates for it?
Cheers
Paul
Answering neither question
If the turnover of a sole trader business is in excess of the VAT threshhold, then you can't use the FPCS scheme. (As one of our learned colleagues recently reminded me!)