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)
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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.
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
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.
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.
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.
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.
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}
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.
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.
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