Let me start by putting on by investors hat:
Most people spend far too much on their cars. They are a depreciating asset and ego and emotion gets involved – and at a cost.
As a property investor – especially when starting off – your funds should work hard for you in an income producing property rather than sitting on the drive. The compounding effect over the next 10+ years is huge.
My mentor is proud to have a second-hand Ford Focus he paid £3k for. He thinks it was worth closer to £4.5k and he got a bargain! He could afford pretty much anything with 4 wheels – but prefers to get his money working for him.
If I put my consumer hat on:
I know of several people that have got to the end of the lease with nicks and chip on the body work or who have driven over the allowable mileage. There are penalties for this.
Personally, I don’t have the energy to worry about some leasing company rules on returning the vehicle.
If I put my accountants’ hat on:
A leased company car allows you to deduct the lease costs against profits – which is great. You will however be liable to fringe benefits tax based on the value of the vehicle – so it is not all good!
If I put my business owners’ hat on:
HMRC allows the company to reimburse me – tax free – up to 45p a mile for all business travel done in my own vehicle for the first 10,000 miles travelled annually. There is a reduced rate if you travel more than this. 45p/mile works out to be a very generous amount and more than covers fuel costs.
A mileage log needs to be kept for all trips. An app such as MileIQ seems to be popular, affordable and easy to use although there are several others.
This is just a simple overview of the issues. The type of car and value as well as the company’s financial situation as well as your financial situation needs to be looked at and balanced against your real world needs for transport.
