For the most part, buying a car as a sole trader can be a unique and sometimes confusing experience, too. Unlike purchasing a vehicle for personal use, there are extra considerations and potential benefits when the car is used for business purposes. So, whether you’re thinking about petrol, diesel, or even getting yourself an EV, you’re going to have to understand the financial tax implications and how these can make the best choice for your business.
So, here at Diamond Bookkeeping, we’re here to guide you through the princess with clear and practical advice. So, let’s jump into it!
Understanding Usage and Tax Relief
When buying a car as a sole trader, one of the first things to consider is how you’ll be using the vehicle. If it’s primarily for business purposes, you can claim tax relief on the vehicle's purchase and running costs. For example, if you use your car 70% for business and 30% for personal use, you can claim 70% of the car's expenses against your taxable income.
So, here’s an example we can look into:
Jane is a self-employed graphic designer, and she decides to buy a new car. She chooses an efficient petrol vehicle to visit clients and run errands. So, since she’s keeping a detailed milage log, this means that Jane will be able to accurately report her business usage to HMRC- this allows her to maximise her tax deductions.
It Helps to Go Green
Needless to say, it helps to go green! If you’re thinking about getting an EV, you might want to hop on the bandwagon, as you can have the potential of receiving a grant for getting an EV, an exemption from road tax, and so much more!
How Diamond Bookkeeping Can Help
We entirely understand that it can be fairly tricky having to navigate all the financial aspects of buying a car as a sole trader. But don’t worry, we’re here to help you! You can count on us to help you make an informed decision so you can make the most out of your purchase! So fee free to reach out to us today for personalised advice for your business needs!
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