Use my own car for business purposes

In this weeks Ask LCM, we will be answering the question, “What if I use my own car for business purposes?”

Ask LCM is a space that we have put together where every week we answer one of your questions.  We aim to keep the answers in short format so everyone has the time to read, learn and progress together.

Ask LCM

Can you use your personal car for business purposes?

The short answer here, is yes.
In fact it is quite common for small business owners to use a car which they already own for business purposes.

One of the obvious advantages of using your own car for the businesses that it saves you purchasing another car which can be expensive.

So by using a car which you own already, you save money and help your cashflow.

Another advantage is that because you are using your own car, you do not have to worry about P11Ds, Benefits In Kind (BIK) or paying additional tax/NIC.  The car already belongs to you personally, not the business.  So there is no taxable benefit.

One potential disadvantage of using your own personal car is that the business will not be able to claim capital allowances.  Capital allowances are a tax deduction similar to depreciation.  

However, your business hasn’t spent any money purchasing a new car, so it is only fair that you cannot claim a taxable deduction.

But you can claim a tax deduction for Mileage Allowance Payments (MAPs).  So what are MAPs?

Mileage Allowance Payments (MAPs)

If you use your own personal car for business purposes, the business can pay you what is called Mileage Allowance Payments (MAPs).

MAPs are designed to compensate you for the use of fuel and general wear and tear of your vehicle.

The great news about MAPs is that, if you keep within the approved milage scheme, they are tax free on you personally.  Plus, they are also tax deductible for the business.  

So, how much can your business pay you to use your own car for business?

  1.  If your personal vehicle is a car or a van, the business can pay you £0.45 per mile for the first 10,000 miles.  Afterwards, the business can pay you £0.25 per mile.
  2. If your personal vehicle is a motorcycle, the business can pay you £0.24 per mile.  This rate applies to all miles, below and above 10,000 miles.
  3. Finally, if your personal vehicle is a bike, the business can pay you £0.20 a mile for every mile. 

More information on MAPs can be found on the HMRC website.  Click here to be taken directly there.

What if I use my own car for business purposes?

To summarise, by using your own car for business purposes, you can save on money and help your cash flow.  

Avoid completing P11Ds, again saving you money & time.

And the business can even pay you some money, completely tax free, as compensation.  

As a result, using your own car for business purposes car be very beneficial for small business owners.

We hope that you have found this short post useful.  If you have any questions about business use of cars or MAPs, please do get in touch.