For those businesses operating as a limited company, it is important to remember that as a director, you are a separate entity from the company. This is in contrast to a sole trader or partnership, where the proprietor or partner is, in fact, the business. This difference sets the context for paying or reimbursing motor expenses.
Self-employed accounts will contain a claim for the business element of motor expenditure, but the treatment of motor expenses in a company will depend on who owns (or leases) the vehicle – i.e., the company or the individual.
If the car is in the name of the individual, then typically AMAPS (Approved Mileage Allowance Payments) will apply to business mileage.
Alternatively, if the car or lease is in the company’s name, a company car benefit will apply. Additionally, a fuel benefit can apply depending on how fuel is paid for.
This is a simplistic summary, and in practice, it is important to ensure that whatever you have in place is both compliant and tax efficient. The treatment should be considered for both the company and individual(s) as part of any tax planning.
If you require any further information, please contact Green & Co on 01633 871122.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.