www.iva.co.uk

Hi,

My car is riddled with unreliability issues, and so I would like to change it.

I know that normally I should speak to my IVA company and ask for a couple of payment breaks to fund repairs or buy another banger.

Trouble is, that I have got a new contract which is quite a commute (I live in Southampton, and now have to travel to London), and I find that I will be going from doing 8,000 miles a Year to 2,000 a Month. So buying another cheap car will probably see me in the same situation again in a few Months and is just not viable.

I know I cannot personally finance/lease a car, and straightforward long-term car hire is too expensive.

However, being self-employed via my own limited company, I was wondering if I could lease a car via the company - assuming I get offered the finance etc.

Read lots on here about Ltd companies being financially separate from individuals.

Any one able to help?

Thanks.

Hi and welcome

It will depend on your limited company standing but worth a try. If they ask you for a PG then you will have to ask permission of your IP

May be worth trying Moneybarn, they seem to have a sensible approach to lending

Good luck

Regards

Hi Free Bird,

Very interesting idea, I too have contemplated this as an option for if my car will not see the IVA through, and/or if I receive a significant income increase (to minimise any increased 'profit' and therefore keep my IVA repayment as low as possible).

Could be quite affordable as well, I have seen things like Ford Fiesta's for around the £100 + VAT mark pcm. Some 'Super-Mini's/City Cars, even less.

My first thoughts are that, assuming the your company is 'credit worthy', then technically you will be allowed to do this without the need to trouble your IVA firm.

As you say: Your Ltd. Company is a separate Legal Entity to you as a person, even if the reality is that 'you' are financially in control either way.

However, take heed of Andy's advice if you have to offer some sort of 'personal guarantee'.

Personally, I would avoid 'Moneybarn' at this stage: With their high credit-card-like APR's, you will be repaying the same amount each Month for a 5-Year old car, vs leasing a new motor through the company for the same outlay.

Question for an IP: Surely the OP will need to seek permission from their IP anyway?: The 'Benefit in Kind' will show up on the personal tax return, so if like me they have to submit their latest books at review time, the IP will see it. Could this then constitute a breach of the IVA (ie: by clearly having taken out extra credit?

On the plus-side, assuming that this would not breach the IVA, I would think that the monthly repayments are written down as operating expenses, so you won't effectively be taxed on them, which will off-set the taxable BIK value to some extent.

If you are VAT registered, you will only be able to reclaim 50% of that back (against your Monthly repayments), due to HMRC assuming that you will use the vehicle for personal use as well as business (the 50% rule may apply to your net monthly repayments as well - check with your accountant).

Not sure if you can continue to reclaim 45p per business mile (I assume you do at the moment?), or if you just have to reclaim VAT against fuel/servicing bills etc (all of it against these items I understand), with corporation tax relief against the net amount.

Also check the lease terms for things like the expected condition of the car when you hand it back. I have heard that some firms expect all the tyres to be the original premium brand with 6-7mm of tread left (ie: like new almost). Check for excess mileage penalties or unreasonable wear 'n' tear conditions as well.

Would be very interested to know how you get on if you pursue this course of action.

Good luck.

Permission for the lending will only be required from the IP if a personal guarantee is required - however if this results in a reduction of disposable income which would affect the IVA, then the IP would also need to consider that - the downside being no car, no income.