Yesterday, I talked to a car finance broker arranging finance for one of our dental practice customers.
We had previously explained to them the cheapest way to run an electric vehicle was using their company, and they were keen to get a new electric car.
Our customer has been trading for less than 2 years through a company, and the finance company couldn’t arrange a lease for their new electric car until the 2 years of trading were completed.
The finance broker had suggested they take out a personal finance lease rather than waiting the 2 years of trading to get the new car.
Taking the lease in a personal name would have not got them the tax relief on the car or its running costs and would have undermined all the tax advice we had given them.
While it’s only a subtle difference, it’s important to get all finance agreements into the name of the company rather than its directors. If this doesn’t happen, it’s not possible to claim tax relief in the company accounts. There are numerous HMRC cases where they have discovered the leases are in the names of the directors rather than the company, and the tax relief has been denied.
I understand from the broker that this was an unusual situation unique to this finance company, and changing to a different one without the 2 years trading requirement shouldn’t be a problem.
Please beware if you have a new company that has yet to file its first accounts or hasn’t completed 2 years of trading and can’t obtain car finance, putting the car leases into the personal names of its directors will not allow the company to claim a tax deduction as you had planned.
