Are tools used to fix a car motoring expenses?

Didn't find your answer?

Hi all,

Here are some details:

Limited Company Director

Nature of the business: delivery drivers using private cars

Director uses private car for business use

Director claims milage

Oh no! Car breaks.

Director have some mechanical skills so he is going to reduce his cost and fix the car himself.

In the process of fixing the car following items are needed:

Car parts

Workshop tools

Both are purchased with directors private money.

It's obvious that car parts are not business expense. They are covered by milage claim.

How about the tools? Would they also be covered by milage claim or can Director claim the cost of the tools separately from the business milage as a business expense?

Tools would stay within the business to be further used on other cars.

 

 

Replies (16)

Please login or register to join the discussion.

By Duggimon
05th May 2020 10:54

The business does not have any cars and will therefore find the cost of tools for working on cars difficult to justify.

How much are we talking here though, if it's trivial I probably wouldn't kick up a stink about it.

Thanks (0)
avatar
By SXGuy
05th May 2020 11:38

Director claims mileage allowance, point one
Company owns no cars, director does, point two.

As Duggimon says, if the costs are minor, id put it though, but I can bet they are not.
In which case, its a personal expense, if the Director has to drawn down on the company to buy it, treat it like you would any other Director Drawings

Thanks (0)
avatar
By tom223
05th May 2020 12:03

Thanks for your answers.

Cost of the tools will be around £1000.

How about if business buys the tools with the view of providing mechanical car services in the future?

Like alloy refurbished and brake caliper refurbished and other small fixes on the cars...

Would that expense then be justified?

Thanks (0)
Replying to tom223:
paddle steamer
By DJKL
05th May 2020 12:26

Taking out third party/public /product liability insurance will then be key re that activity. If doing repairs on other people's cars ,and they need moved around, then a garage type policy also looms.

Seems a lot of grief for £200-£400 tax .

We are a property company with a reasonably kitted out garage ( car lift/compressors/lathes/dollies etc) but we did , at one point, have about 10 vehicles and a wedding car business to justify the costs, and there are costs, even the annual car lift inspection/insurance needs paid.

Thanks (0)
Replying to DJKL:
avatar
By tom223
05th May 2020 12:48

Interesting, thank you for the heads up regarding insurance. I guess in terms of alloy wheels and calipers repaint if customer brings me the parts and I just paint them and return them to customer so that they can install them back onto the car the I would not need an insurance. The problem is that I do want to do alloy refurbishment and it's not just to reduce my tax.

Thanks (0)
Replying to tom223:
paddle steamer
By DJKL
05th May 2020 14:26

Product liability might arise and you certainly need to disclose activity to insurers if the customer for that activity visits the premises. Also employer liability/third party re anything arising from the process(paints/fumes/ ventilaton etc ) needs considered.

Insurance is a contract of the "utmost good faith", that means the insured must tell the insurer what he/she does and that may increase insurance coverage required and its cost- we use brokers to make sure we are covered.

Thanks (0)
Replying to tom223:
A Putey FACA
By Arthur Putey
05th May 2020 12:32

They would in business terms but the director's use of them might be a benefit in kind, including the value of the director's labour.

Mind you, a trolley jack might come in handy in the office, for instance to jack up wobbly desks to adjust their feet. Or an air compressor to blow away dust.

Thanks (0)
Replying to Arthur Putey:
avatar
By tom223
05th May 2020 12:52

In which case director won't use them to fix the car and I drop that idea and focus on buying tools for wheel refurbishment and office fixes so that I can justify my expenditure with my new offering of wheel refurbishment service.

Thanks (0)
Replying to tom223:
A Putey FACA
By Arthur Putey
05th May 2020 14:00

whould that extend to wheels of expensive office chairs?

Thanks (0)
Replying to Arthur Putey:
avatar
By tom223
05th May 2020 14:13

Most definitely yes! It sounds like a good use of company money. 20 inch ally wheels on all office chairs :D

Thanks (0)
By Duggimon
05th May 2020 14:02

Nice third person to first person switch there.

If your business is in fixing cars then the tools are an expense of the business. If they're for fixing your car then they are not. If you're going to fix cars in the future then in the future they will be an expense of the business but just now they are still not.

Thanks (2)
Replying to Duggimon:
avatar
By tom223
05th May 2020 14:18

I'm starting today :) with car fixing business. Is it ok for one limited company to have multiple trades ?

Thanks (0)
Replying to tom223:
paddle steamer
By DJKL
05th May 2020 14:33

Yes ,but may not be best thing to do- talk to an accountant before you do anything.

Given trades are very different it may be a vat advantage to have more than one entity, given one activity is a new start possibilities re early years loss reliefs may need considered , future tax planning re business sales in future and of course splitting liabilities may all feature in thinking.

Seeing an accountant first could be the best VFM you ever get.

{ This was a broadcast from the Accountants' Party}

Thanks (0)
Replying to tom223:
.
By Cheshire
05th May 2020 16:11

But you have paid for some tools already (past tense), even though you may be planning on buying more.

Is it ok - yes. Is it wise....completely different scenario.

Stop desperately trying to re-write history.

Thanks (0)
avatar
By Tax Dragon
05th May 2020 14:35

You do understand that there's a difference between fixing broken cars and pimping your ride with alloys etc? The only reason I mention that is that sometimes (or more often) the tax treatment depends on the actual facts, so making up a whole load of baloney might get you answer(s) that are as much use to your situation as a set of chocolate wheels in summer.

Thanks (1)
.
By Cheshire
05th May 2020 16:12

tom223 wrote:

Hi all,

Here are some details:

Limited Company Director

Nature of the business: delivery drivers using private cars

Director uses private car for business use

Director claims milage

Oh no! Car breaks.

Director have some mechanical skills so he is going to reduce his cost and fix the car himself.

In the process of fixing the car following items are needed:

Car parts

Workshop tools

Both are purchased with directors private money.

It's obvious that car parts are not business expense. They are covered by milage claim.

How about the tools? Would they also be covered by milage claim or can Director claim the cost of the tools separately from the business milage as a business expense?

Tools would stay within the business to be further used on other cars.

 

 

For the usual

Thanks (0)