I’m selling my car and getting a new one on a pcp (personal contract purchase) scheme. My accountant says I don’t have to write it down but I’m not sure he’s right. Can you help?
Our small business expert David Rawlings replies:
If you enter into a PCP scheme it should in theory be a personal contract so that you are buying the car, and not the business. In this case the business can’t claim capital allowances, in which case the accountant was right. What would then happen is you charge motoring expenses back to the business (usually full AMAP rates of 45p per business mile).
It may be that your contract isn’t a PCP, or that the finance company has actually allowed the business to enter into one.
The other scenario if you are self-employed is that a proportion of tax relief is allowable against income tax depending on the amount of business mileage versus private mileage.
David Rawlings Director, BCF Wessex
Need more help with business car finance? Read these:
- The rising appeal of personal car finance
- Business mileage rates for using a private car
- I’m a sole trader, what’s the best way for me to run my car on my business?