Article six on using a vehicle for business purposes

Welcome to article 6 in our series of 6 articles in relation to the tax implications of using a vehicle for business purposes. Please see articles 1-5 here.

Yesterday we had a look at the tax implications of the 2 most common methods used to finance the purchase of a commercial vehicle – Lease v’s Hire Purchase.  Today we will look at claiming tax free mileage payments when you use a personal car for business journeys.You might remember in article 1 of this series we met the unfortunate Mr. Jones who bought himself a lovely 2005 Mercedes S-Class for €10k through his Ltd. Co.  and was now faced with an annual tax bill of €15k on a car that only cost €10k! – and all because he didn’t ring us first to consider the tax implications.

What if Mr. Jones had rang us first but still wanted his Mercedes S-Class but wanted a more tax efficient way of doing things.  Well, let’s assume that Mr. Jones does 25,000 business km travel in his car each year.  If Mr. Jones had bought the car in his personal name rather than through the company he could now be claiming €9k tax free mileage allowance from his company – all he has to do is keep records in the prescribed manner and claim at the civil service mileage rates per km – that would have been a far better solution and shows the benefit of ringing us BEFORE changing the vehicle!

We hope you have enjoyed this series of 6 articles outlining some of the tax implications of using a vehicle for business.

As we said at the outset, most business owners will use a vehicle in the course of running their business, at least to some degree.  From a tax point of view this is an opportunity to get things very right or very wrong and it is good to understand this BEFORE buying a new vehicle.  If you are thinking of changing your vehicle in the New Year you should talk to us first so you understand the tax implications.  The type of vehicle you drive, how you choose to finance the purchase of that vehicle and whether you operate as a sole trader or a Limited Company can all have significant tax implications.

This serious of articles are for illustrative purposes only and do not constitute professional advice.  To make an appointment to discuss any of the issues raised in these articles and the services we provide please contact us.