Should you have a company car or a car allowance as a sole trader?
We are asked so often by our clients, both limited company directors and sole trader whether they are better off putting their cars through the business or not, and the short answer is… it depends.
As a sole trader if you are vat registered you have no choice – your car goes through the business whether you like it or not.
That means all of the associated expenses also go through the business – the cost of buying and maintaining your vehicle, your fuel, road tax, insurance and so on can all go through business.
But you still have to keep mileage records!
Because you only get tax relief on the actual business element of your travel.
If you aren’t VAT registered you can choose whether to claim mileage or put your vehicle through business, and every time you change vehicle you can change which way you account for it, so speak to your accountant about what works best for you.
Get in touch with In Accountancy today to learn more about car allowances vs company car as a sole trader!