Owning a car that’s been purchased through a UK-based limited company is a viable option for a business. However, it’s worth evaluating whether this is really your best option, or whether there are more suitable alternatives.
Can you buy a car through a UK limited company?
The short answer is yes. However, there are a number of variables that you need to consider, which include the vehicle type, usage, and its CO2 emissions.
Benefits in kind
One of the first things to ask yourself before deciding whether or not to buy a car through your limited company is what that car will be used for. If you are using it for any private use – including the commute to and from work – your company will need to pay a tax called ‘benefit in kind’ (BIK). This is based on the value of the vehicle when it was new. The company will also need to pay Class 1A National Insurance.
You can only claim back VAT on a car that’s used exclusively for work purposes. Similarly, you may end up being taxed on fuel in addition to the BIK tax.
It’s also worth noting that having a car through a limited company means putting its day-to-day running costs through company accounts, which may impact profit margins.
If you choose to buy a car through your UK limited company, you’ll be able to claim tax relief through capital allowances. The amount you can claim, however, is dependent on the car’s CO2 emissions. The more CO2 released, the higher the tax you’ll need to pay.
Financing a car through your limited company
Car finance is a sensible option if you’re looking to spread the cost of a car when buying through your limited company. Calculate your car loan online or contact our team to talk more about buying a car through your limited company.
Representative APR 10.9%
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Require more help?
Got a question you can’t find the answer to, or need some advice and guidance around taking out car finance? Our Car Credit Specialists are friendly, experienced, and here to help so get in touch today!