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Car conundrum

21 October 2014
Issue: 4474 / Categories: Forum & Feedback , Employees , Income Tax

Is a privately-owned or company-owned car more tax advantageous?

My client runs her business through a limited company of which she is the sole director and shareholder and sole employee. The company is in its early stages and is not making a huge amount of money. Remuneration was not taken in the first few years.

The director has been using her own car (now getting on in years and increasingly unreliable) and claiming mileage allowance.

However she has mentioned the need for a newer car and I am wondering whether this should be purchased personally – with the mileage claims continuing – or whether it might be advantageous to purchase the car through the company.

I have it in mind that the general theory is that company cars are no longer tax-efficient but is this always the case?

Would the fact that the personal allowance could be set against the taxable benefit make a company car purchase...

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