Company Car or Not if you are a Sole Trader?

sole trader

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!

Let’s start a conversation 

    Subscribe me for updates and news from In Accountancy

    Related articles

    time to pay arrangement
    Limited Companies

    Time to Pay Arrangements: A Lifeline for Owner-Managed Businesses

    Are You Struggling to Meet Your Tax Obligations?

    More than 30,000 UK businesses were involved in some kind of insolvency action in 2023, which was an increase of more than 50% compared with 2021 according to an article in the Guardian earlier this year.

    And the economic outlook would suggest that despite the fact that we are no longer in recession, 2024 and 2025 will be a challenging year for UK small business.

    With this in mind we have prepared the following guide and associated video to help you understand what your options are with regards to agreeing what is known as a ‘Time to Pay’ arrangement with HMRC.

    Read More »

    Find out how we can help?

    Lectus scelerisque a donec tincidunt litora per eleifend eget ut sagittis conubia pharetra scelerisque dui ultricies duis parturient auctor adipiscing.


    Let’s start a conversation 

      Subscribe me for updates and news from In Accountancy