Car PCP against Corporation Tax and VAT?

Company car needed for both personal and business use, but is PCP allowed to reduce Corp Tax?

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A director of a small company wants to purchase/hire a car for 2 years.

I appreciate that Business Contract Hire (BCH/Leasing) monthly payments can be offset against profit and losses, and additonally half VAT can be reclaimed (as being used for both personal and business).

However, does the same apply under PCP? Its a personal contract so I assumed not. The PCP will be for 2 years whereby the director will hand the car back at the end of the term.

Also, under both BCH/Leasing or PCP, can the director still claim travel expeneses of 45p a mile (up to 10000 miles etc)?

Thank you 

Replies (3)

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By Leywood
27th Feb 2024 08:13

These are questions you should put to your Accountant.

This is not a forum for free tax advice.

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By Ruddles
27th Feb 2024 08:19

The company may be entitled to a deduction for the PCP payments if the director is willing to accept the income tax and class 1 NI charges.

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VAT
By Jason Croke
27th Feb 2024 08:59

I presume OP is the Director of the small company.

The PCP contract will determine what the VAT treatment is, only the dealer/finance provider can make the decision, based on the final ballon payment, it is not determined by whether you hand the car back or not.

Also, a PCP ("Personal") suggests the Director is taking the contract in their own name and not under the company name, so you need to understand what implications that might have too.

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