Should you buy a car for your limited company? The Best Guide for the UK in 2025
Should you buy a car for your limited company? The Best Guide for the UK in 2025 Table of Contents What Buying a Car Through a Limited Company Means Important: Benefits of Buying a Car Through a Limited Company Disadvantages of Buying a Car Through a Limited Company Tax Implications in Detail Electric and Low-Emission Vehicles: A Game-Changer for Taxes Leasing or buying: which is better? Other ways to own a business Step by Step: How to Get a Company Car by Buying or Leasing Answers to Common Questions Conclusion: Is this the right choice for you? If you are a director or owner of a limited company in the UK, it is important to find the best tax situation for your business while still meeting its needs. If you do it right, buying a car through your limited company can save you a lot of money on corporation tax, VAT, and even personal taxes like dividends and National Insurance. HMRC has strict rules about personal use, CO2 emissions, and financing. If a wrong choice is made, one could end up paying a lot of Benefit-in-Kind (BIK) taxes that are more than the benefits. In this guide, we’ll talk about the pros and cons, tax effects, VAT details, other options like mileage claims or car allowances, and special incentives for electric vehicles (EVs). Using expert advice, we’ll help you figure out if it’s worth it for your situation, whether you’re a contractor racking up miles, a startup keeping an eye on cash flow, or an established business looking for eco-friendly options. By the end, you’ll have a clear plan that shows you how to buy or lease, gives you real-life examples, and tells you how to avoid common mistakes. What Buying a Car Through a Limited Company Means? When a limited company buys or leases a car, it becomes a business asset. The company remains the owner, pays for it from its business account, and adds it to its balance sheet. This requires to deduct some of the costs from the taxes, but the vehicle has to be used mostly for business (like visiting clients, running errands, or making deliveries). Using it for personal reasons, like going to work or taking a family trip would mean one has to pay more taxes. The company must treat private use as a taxable benefit, and report on P11D / P11D(b). Important: ● Used Cars vs. New Cars: Brand new cars often get higher capital allowances as they are more efficient, but they lose value sooner. Used cars cost less up front, but they might not give you as much tax relief and might need more maintenance. ● Business vs. Personal Use: If something is used for business only, all VAT can be refunded and BIK tax avoided. Vehicles used for miscellaneous purposes have a 50% VAT limit on leases and a BIK based on CO2 emissions. ● CO2 emissions and the list price: They affect BIK rates and capital allowances. Lower emissions mean bigger savings. ● Annual Business Mileage: If you drive a lot, it might be better to own the car yourself and make claims at 45p/25p per mile. ● Buy or Rent: If you hire something (like a business contract hire), you can get some of the VAT back even if you use it for personal reasons. If you buy something, you can’t get any VAT back if you use it for both business and personal reasons, but you do own it. If you are a sole trader or a partner, you can’t claim capital allowances. Instead, you should claim mileage. Sole traders can choose to claim capital allowances or mileage but not both. Benefits of Buying a Car Through a Limited Company This can lower the taxes and give an edge in one’s career, especially if one drives an electric vehicle or a car that is only for work. 1. Tax Savings for Corporations: The cost of the car can be written off through capital allowances: 100% in the first year for new zero-emission EVs, 18% for low-emission EVs that go less than 50g/km, and 6% for EVs that go more than 50g/km starting in April 2021. You can fully deduct your running costs, which include insurance, maintenance, repairs, MOTs, road tax, and parking (not fines). This lowers your taxable profits. Interest on hire purchases and loans can also be deducted. 2. VAT Reclaim: Are you registered for VAT? If you only use it for business (like pool cars, vans, or taxis), you can get back 100% of the cost. For mixed use, you can get back 50% of your lease payments or fuel costs (through scale charges). There may not be VAT on used cars, but check anyway, dealers often sell them without it. Unique tip: Leave the car at work overnight to show that you used it for business and get the full refund. 3. Dividend/Employee NIC Savings: When a company pays its employees, it lowers the amount of money they take out of their own pockets, which lowers the amount of dividend tax (up to 33.75% for higher-rate taxpayers) or employee NIC, which is a way to save money without doing anything. 4. Professional Image and Branding: A car with your company’s logo on it is like a moving advertisement that makes meetings with clients more reliable. 5. Cash Flow and Flexibility: Leasing spreads costs out over time with fixed payments, no upfront costs, and maintenance included. This makes it perfect for new businesses. You don’t have to worry about depreciation because the car comes back at the end of the lease. 6. Incentives for Electric Vehicles: In 2025/26, EVs will get 3% BIK (likely to rise to 5% by 2027/28), 100% first-year allowances, and £3,750. Plug-in Car Grant (for cars worth less than £37,000) and Workplace Charging Scheme (up to 40 sites, £350 per socket). Costs of running: 2–3p per mile compared to 16p for diesel, plus eco-cred for clients. Charging
Stamp Duty Cut for Landlords – What It Means in 2025
Stamp Duty Cut for Landlords What does it mean to the landlords? What is stamp duty? Stamp duty is a tax which you have to pay when you buy a property over a certain value. The stamp duty is paid by the UK residents and also by the non UK residents at a surcharge of 2% for buying property in the UK which costs more than £ 40 000. The Stamp duty cut in the mini budget As part of the government’s growth plan 2022, the chancellor announced that the stamp duty cuts. The changes are as follows: 1. No tax will be paid by the buyer on the purchase of a property of upto £250 000( which was previously £125 000) 2. The threshold for the first time buyers has increased to £425 000 which was previously £300 000 This stamp duty cut applies to any purchases that are finalised on or after 22 September 2022. You can also benefit from the stamp duty cuts if you are in the process of buying the house. If you want to know how much stamp duty you will have to pay as first time buyers or as purchasers of additional property go to our stamp duty tax calculator Do the changes apply to the landlord as well? These changes apply to the landlords as well, however, the landlords will continue to pay the additional 3% surcharge on the purchase of an additional property. The 3% surcharge will apply when you are buying a second home as an investment buy to let or a holiday home. However,it will not apply on the purchase of caravans, house boats or mobile homes The 3 year rule If you buy a second property which will be your main residence now but there was a delay in the selling of your previous property which was your main residence you must have paid the higher rates of the stamp duty as you owned 2 properties at one time. However, there is a 3 year rule, according to which if you sell your previous property within 3 years of buying the new one you can apply for a refund for the additional rates which you paid above the normal stamp duty rates. How much stamp duty will I pay if I buy a buy-to -let property The additional stamp duty will apply to any property which is bought for £40 000 or more. How much stamp duty you pay depends on the price of the property. The thresholds and rates are listed in the table below: Property Price / Transfer Value Stamp duty rate Upto £250 000 3% From £250 000 to £925 000(the rate will apply to £675, 000) 8% From £925,001 to £1.5 million(the rate will apply to the next £525,000) 13% From £1.5 million above(the rate will apply to the remaining amount) 15% Stamp duty tax relief for multiple dwellings According to HMRC you can get a relief when you buy more than one dwellings if a transaction include freehold and leasehold interests in more than one dwelling.This means that if the home buyer is purchasing multiple properties they can claim this relief. Landlords can be benefitted by this relief as well. For more on this relief you can contact Taxaccolga and our property accountants can help you. Taxaccolega, accountants based in croydon, London specialises in property tax, inheritance tax, social media tax, personal tax and corporation tax. For any queries related to book keeping, tax planning please contact us at 020 8127 0728 or email us here CTA Box See How Much You Can Save CALL NOW Take the stress out of UK taxes and accounting today — speak with a top-rated Taxaccolega chartered accountant for personalised advice tailored to your business or personal needs. Book a free Consultancy Related Posts ID Verification × ID Verification Form For Companies House From 18 November 2025, UK law will require all company Directors and Persons with Significant Control (PSCs) to verify their identity with Companies House. Companies House will issue a personal code to PSCs. Taxaccolega (ACSP) can help collect data and assist. Please answer the questions and upload documents. Personal Details Fornames * Last Name * Date of Birth *
4 reasons why I should Submit my tax return early
4 reasons why I should Submit my tax return early If you started your business as a self employed person or as a sole trader or as a partnership you need to register for a self assessment tax return with HMRC latest by 5th October in the second tax year of your business so you can pay your taxes. At Taxaccolega Chartered Accountants, we offer a range of advice for dealing with taxes for sole traders and start ups, to larger established companies, and we believe that everyone should benefit from submitting their tax returns early. So it’s important to keep the deadlines to submit in mind. You have to submit your tax return to HMRC latest by ● Midnight of 31 Oct 2022 if you want to submit the paper return. Or ● Midnight of 31 Jan 2022 if you want to submit the tax return online. HMRC no longer sends self assessment tax return forms however, you if you want to submit the paper return you can download one from here Whichever way you choose to submit your tax return online or offline you should not leave it to the last minute. HMRC will accept the completed tax return for the tax year 2021 to 2022 anytime between 6 April 2022 till 31 Jan 2023. There are benefits for submitting the tax return early and few are listed below. 1. Better tax planning If you plan to submit the tax return early you will be better off in a way that you will have time to budget your tax payments. You can keep the tax money aside as well. You will also have time to consult your tax advisors and accountants for ways to reduce your taxes by suggesting some reliefs that might apply to your situation. 2. Early refund Submitting your tax return early doesn’t mean that you have to pay the tax due early as well. Submitting your tax return and paying your tax liability are two different things. However, if you submit your tax return early and you HMRC owes you a refund you will get the refund early and this will make your cash flows look better. 3. Queries will be answered HMRC helpline is very busy and especially during the times near the tax deadlines. You have to wait for long hours if you want to ask HMRC questions. This adds stress when you don’t understand something about your tax return and only a few hours are left before you can submit the return otherwise you will have to bear penalties if they are not submitted on time. If you start to work on your self assessment tax return early you can have your queries answered and you can fill in the tax return properly, this will give you peace of mind and you won’t be worried that you have over under or over paid which can affect your cash flows. 4. You can include all your expenses When you plan to do your self assessment tax return early you are more likely to be better organized. When you are more organized you can reduce your tax bill by including all the allowable expenses. If you need to file your self assessment tax return and you are looking for a tax advisor for professional advice contact Taxaccolega and our team of specialist accountants will be happy to help you. CTA Box See How Much You Can Save CALL NOW Take the stress out of UK taxes and accounting today — speak with a top-rated Taxaccolega chartered accountant for personalised advice tailored to your business or personal needs. Book a free Consultancy Related Posts ID Verification × ID Verification Form For Companies House From 18 November 2025, UK law will require all company Directors and Persons with Significant Control (PSCs) to verify their identity with Companies House. Companies House will issue a personal code to PSCs. Taxaccolega (ACSP) can help collect data and assist. Please answer the questions and upload documents. Personal Details Fornames * Last Name * Date of Birth *
UK Corporation Tax 2025 – Key Changes & Limited Company Prep
Corporation tax changes in 2023 and how to prepare for the changes if you run a limited company The government announced that the corporation tax will increase from 19% to 25% from April 2023 as already legislated for. Although the growth plan statement on 23rd September proposed to cancel the changes, it was announced on 14th Oct that the original plan to increase the corporation tax will go ahead. What are the changes? The tax rate will increase to 25% for companies making a profit of £250 000 or more. Corporation tax will be paid at 19% for companies making a profit up to £50 000. Companies with profits between £50 000 and £250 000 will pay tax at the main rate reduced by a marginal relief. How does it affect the associated companies? The upper and the lower limits are reduced in case of the associated companies. This is because in the associated companies the profits are equally divided among the companies. What is an Associated company? According to HMRC a company is associated(no matter where it is resident for tax purposes) if : ● One company has the control of the other ● Two companies are under one control How should I be prepared ? Make sure you are utilizing your AIA(annual investment allowance) You can deduct the full value of an item that qualifies for AIA from your profits before tax. There is also an AIA extension which is going to affect the businesses investing more than £200 000 in plant and Machinery from Jan 2022.This extension is for the investments from Jan 2022 till March 2023. The AIA amount has temporarily increased to £1million between 1 Jan 2019 and 31 March 2023.The companies can claim 130% in the first year relief on the main pool qualifying asset and 50% in the first year on the special rate pool . Make sure you are using all kinds of reliefs When you are making your accounts you should make sure that you are saving costs by utilizing reliefs available to your business. There are different reliefs that apply to different businesses and in different situations. You can talk to your accountant to make sure you are saving as much costs as you can, Be clear on your group structure If you own more than one company you should be very clear about the control issue. Make sure you understand if your company is associated or not in order to use the right tax rates to your profits and avoid any penalties. Maximize your profits With the rising costs it’s important that you focus on maximizing your profits. You can do this by better advertisement on social media, introducing more innovative products etc. Need help ?If you are looking for an accountant you can help you with your corporation tax, your group structures, tax returns contact your accountants in Croydon, Taxaccolega and our team of accountants will be happy to help you. CTA Box See How Much You Can Save CALL NOW Take the stress out of UK taxes and accounting today — speak with a top-rated Taxaccolega chartered accountant for personalised advice tailored to your business or personal needs. Book a free Consultancy Related Posts ID Verification × ID Verification Form For Companies House From 18 November 2025, UK law will require all company Directors and Persons with Significant Control (PSCs) to verify their identity with Companies House. Companies House will issue a personal code to PSCs. Taxaccolega (ACSP) can help collect data and assist. Please answer the questions and upload documents. Personal Details Fornames * Last Name * Date of Birth *