Opt out car - tax relief on loan

[Escort2dr]

I opted out of my company car scheme 4 years ago and financed the last couple of vehicles with a personal loan; is it still possible to claim tax relief on the interest on the loan? If so, what's the best way of putting it on the self assessment form?

[Eric Mc]

Is it possible to claim the interest on such a loan?

If it is, the claim would need to be restricted to the job related use of the vehicle only.

[softtop]

Escort2dr said:

I opted out of my company car scheme 4 years ago and financed the last couple of vehicles with a personal loan; is it still possible to claim tax relief on the interest on the loan? If so, what's the best way of putting it on the self assessment form?

IIRC this disappeared about 2003. The final year of being able to claim the exact method of all of your costs including servicing and loan interest. It then went to a standard rate regardless of the costs. I remember it because it was the year that you could 'sell' your vehicle in the eyes of the tax man and make the relevant claim. This was the balancing charge and the last chance to make sure you were not disadvantaged.

So as a non tax specialist I would say you will find it tricky if this is not a commercial vehicle.

[smartie]

does your employer pay you 40ppm for usage? If so, then an element of this is to cover the purchase costs of running your own car.

You could calculate the total annual running costs of using your own car (including the interest) and apportion this for business use, and then deduct the total paid to you at 40ppm. Would you be in profit?

[Escort2dr]

They pay a taxable car allowance and 13.5p/mile for diesel car use. I claim tax relief on the difference between this rate and the HMRC rates.

Thanks for the help.

[JQ]

I may be completely missing something, and due a windfall if I am wrong - but if they are giving you a car allowance how can you claim tax relief on the difference between the 13.5p and the HMRC Rates? I thought that tax relief was only available if you didn't get a car allowance because the company are already recompensing you for depreciation and the running costs of the car with the allowance.

Caveat - I've only just left the Company car scheme after 10 years, so am unsure on this point and would be interested in the correct answer from someone far more informed than myself.

[Escort2dr]

The allowance is taxable. If I am wrong, then there are dozens of others in my company who are also wrong.

[softtop]

JQ said:

I may be completely missing something, and due a windfall if I am wrong - but if they are giving you a car allowance how can you claim tax relief on the difference between the 13.5p and the HMRC Rates? I thought that tax relief was only available if you didn't get a car allowance because the company are already recompensing you for depreciation and the running costs of the car with the allowance.

Caveat - I've only just left the Company car scheme after 10 years, so am unsure on this point and would be interested in the correct answer from someone far more informed than myself.

When you get an allowance it is taxed like your wages are, so no different than getting a wage rise. You then get to claim running costs for business miles, so you get a maximum of 40 and 25p to run your car, if you do it for less you get tax back, if it costs you more then dig deep..

Edited by softtop on Tuesday 9th March 21:11

[bogie]

JQ said:

I may be completely missing something, and due a windfall if I am wrong - but if they are giving you a car allowance how can you claim tax relief on the difference between the 13.5p and the HMRC Rates? I thought that tax relief was only available if you didn't get a car allowance because the company are already recompensing you for depreciation and the running costs of the car with the allowance.

Caveat - I've only just left the Company car scheme after 10 years, so am unsure on this point and would be interested in the correct answer from someone far more informed than myself.

as far as the tax man is concerned the car allowance is part of your salary ..think about it - you could have 20% of your salary called a "car allowance" if it were treated any differently to regular salary and was advantageous.

so ignore the allowance

its all about business miles

if your employer pays you .25p a mile, you claim the tax back on the remainder up to whatever the IR rates are for that year

right now its .40p for 10K miles and .25p thereafter

wait until you get your P11D for the year and fill out your tax return

say you do 20K business miles, then you get tax rebate at 25 or 40% on .40p x 10000 + .25p x 10000 = £6500

simple as that really

for the last 10 years ive always had car allowance + business miles, as I can run a 5 year old £50K luxury car and still be better off than having a £25k 1.8 diesel company car

[softtop]

bogie said:

for the last 10 years ive always had car allowance + business miles, as I can run a 5 year old £50K luxury car and still be better off than having a £25k 1.8 diesel company car

You must get one hell of an allowance, your stable is a bit more than one old Mondeo