Best option? Lease or Buy - self employed. Best mpg

Solus

Solus

Solus

Associate
Joined
5 Oct 2006
Posts
901
Location
Cardiff
Basically here's the situation.

I have been self employed for 4 years and have had my car just over 5 years. It's a Vauxhall Astra 1.6i SXi 08 Plate 5 door hatchback.

The mpg I'm getting is around 32mpg, the warranty has expired, tax is high, around £170 and insurance isn't great, but not too bad

I'm looking in to selling it privately for around 4k, possibly leasing a Hyundai i30 active 1.6 blue drive for £230 a month and claiming back 80% of the cost aa expense to my business.

Most of my driving is urban, to and from customers' homes, the mpg, tax etc is great on the i30, I'm just too worried about judgment day when they inspect the vehicle when I drop it back after 3 years, especially as it will commonly be parked on street curbs.

I have been trying to find something similar in terms of mpg (60mpg+) used which would allow me to simply swap cars with similar boot size. I don't mind going for an older car as long as it isn't french and can be suited as a family hatchback with 5 doors.

Does such a car exist? Am I seriously limited to moving from the astra sxi to an astra ecoflex?

Any advice regarding charges by leasing companies for damage also gratefully received!
 
If you are only getting 32mpg from an Astra 1.6 on an 08 plate then you can forget 60mpg from anything - you won't be getting that.

You also need to make sure you understand the tax and cost of leasing through the business, who exactly are you going to claim back '80% of the cost' from?

To be honest I think you are better off keeping the Astra - it is neither old nor unreliable and the tax isn't very expensive - and paying yourself expenses at the HMRC rent for it's use for your business.
 
It will be 80% of the lease amount per month as an expense. So it would essentially drop my profits by that amount, essentially dropping how much tax I pay.

From what i've read around 35mpg is average for my engine, I don't hammer it.

Because I bought the car before I started the business (I was employed at the time) I'm unsure how to claim the tax.
 
Solus said:
It will be 80% of the lease amount per month as an expense. So it would essentially drop my profits by that amount, essentially dropping how much tax I pay.
Click to expand...

The lease costs are tax deductible but then you personally become liable for company car tax if you use the vehicle for any personal use.

But presumably your corporation tax rate is 20% so effectively even by offsetting your lease costs against tax you are only really saving 20% - the fact the business pays the lease not you doesn't save 'you' money as its your business, so its indirectly still your money anyway.

From what i've read around 35mpg is average for my engine, I don't hammer it.
Click to expand...

Your MPG suggests a lot of town use - as does your post - you wont get 60mpg from anything around town let alone an i30.

Because I bought the car before I started the business (I was employed at the time) I'm unsure how to claim the tax.
Click to expand...

You don't - you simply charge your vehicle usage against the company at an expense rate of 45p a mile. Therefore you personally receive 45p, tax free, per mile driven on business. This covers the cost of using your car for business and your business can offset these expense payments against tax.
 
That is what I do currently (claiming the mileage). I guess I just wanted to ensure I don't lose out so much by depreciation. I paid £8000 for it a few months old and is only worth £4000 now. An 07 plate is currently worth £3300 according to parkers so am I just going to end up with a car worth sod all in 2/3 years?

I'm glad i'm not missing out too much on the mpg, that was my main reason for looking as it's set at 45p per mile I wanted to get the most from this.

I do like the car, I haven't fallen out of love with it. It's reliable, has a bit of oomph and is generally a fun drive. I did have the coil pack go faulty within warranty and my wipers currently knock which i'm advised isn't a cheap job and quite common.
 
Solus said:
That is what I do currently (claiming the mileage). I guess I just wanted to ensure I don't lose out so much by depreciation. I paid £8000 for it a few months old and is only worth £4000 now. An 07 plate is currently worth £3300 according to parkers so am I just going to end up with a car worth sod all in 2/3 years?
Click to expand...

The depreciation will slow as the car gets older but - its bought now. You own it. Its yours. Why not get maximum value for money out of its use?

If it was going horribly wrong on a weekly basis the situation changes but I suspect it's really quite reliable.


I do like the car, I haven't fallen out of love with it. It's reliable, has a bit of oomph and is generally a fun drive. I did have the coil pack go faulty within warranty and my wipers currently knock which i'm advised isn't a cheap job and quite common.
Click to expand...

Better the devil you know!
 
Just to throw a spanner in the works, are you self employed or have you set up as a Limited company?

What Fox has said is spot on if the car was to be put through a company, if you are a sole trader though it will be different.
 
I am not limited and not vat registered.

Sole trader and do self assessment each year. I thought I may have been able to claim some sort of capital for the car as well as the mileage / maintenance.
 
Solus said:
I am not limited and not vat registered.

Sole trader and do self assessment each year. I thought I may have been able to claim some sort of capital for the car as well as the mileage / maintenance.
Click to expand...

If I were you I'd put every expense through including tyres, services, car wash, even a new air freshener!

Then you can expand on that and include your lunch everyday as an expense.

I agree with Fox that you should keep the Astra. Can't see how you'll get 80% back from the lease scheme?
 
Without all the figures from each scenario, no one will be able to tell you which is the most cost effective route.

I'd recommend you speak to your accountant (if you haven't got one, then it would be worth speaking to one). For what it will cost you each year for an accountant you will probably save that amount in tax each year.

e: In terms of what to do with the car, that's up to you whether you want a new car or not, if you do, it's worth speaking to an accountant to figure out what would be most tax efficient.
 
May be worthwhile me seeing an accountant I guess. I can't claim for servicing, tyres etc as i'm doing the 45p per mile route. This is supposed to include maintenance of the car.

I am earning circa 15k a year profit at present, so no.
 
Under what circumstances is it beneficial to lease through your business as opposed to claiming mileage using your own private vehicle?

I have a limited company that is VAT registered and I've received so much conflicting advice that I honestly don't have a clue.
 
You must log in or register to reply here.
Back
Top Bottom