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Car Leasing Accounting for Sole Trader

Question asked by Alan Bennett 5 months ago

When leasing a car for 40% business use am I right in saying the following is the solution for accounting for monthly costs:

'You can actually just do it in one bill with the total sum being taken each month as the gross and the exact VAT you want to claim using 'manual' the net rental then reflects the actual cost to you.' >>>>> 50% VAT can be claimed back.

At the end of a tax year, how do I make an adjustment for the 60% that I used for private travel?

Is there an account for vehicle leasing already within Clearbooks?

How does carbon emissions effect accounting? I think if it's under 130 co2kg there is a benefit? Thinking of going for a hybrid car.

4 Replies

Hi Alan,

I think it might be best to confer with an accountant too, however, from the HMRC site you can indeed claim 50% of the VAT if you lease a car.

https://www.gov.uk/reclaim-vat/cars

The solution you refer to seems to be the easiest way to add this in Clear Books:

'You can actually just do it in one bill with the total sum being taken each month as the gross and the exact VAT you want to claim using 'manual' the net rental then reflects the actual cost to you.' >>>>> 50% VAT can be claimed back.

We don't have a leasing car vehicle account code - so one would need to be created for that bill -

https://support.clearbooks.co.uk/support/solutions/articles/33000203015-how-to-add-new-account-codes

As for the benefits of carbon emissions and making adjustments for the 60% of use as private travel - I take it you are planning to reclaim VAT on fuel too?

https://support.clearbooks.co.uk/support/solutions/articles/33000222931-fuel-scale-charge

looking at the maths, I really dont think it is worth the effort to claim VAT on fuel. I'm only doing between 4000 and 5000 miles per year.

If I'm claiming leasing charges I take it then that I would no longer claim the 45p per mile as this includes depreciation of the vehicle.

Sorry Alan - I'm not sure about that, it may be best to double check with an accountant to verify if you can or not.

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