When you are a Limited Company or a Sole-Trader or Partnership, most expenses are very similar in terms of tax relief. But, there is one area where there are differences – car expenses. A Sole-Trader would generally claim capital allowances on the car plus all the vehicle fuel costs, the road tax, the insurance, repairs and servicing – and discount the private proportion. If a Company owns a car that the director/employee drives, it can put all the costs through the Company, but the downside is the director/employee would be taxed heavily on the Benefits in Kind calculation – so it is more tax efficient for the car to be personally owned and the mileage to be claimed back from the Company at 45p/25p per mile.
