Q&A: Company car tax

Q: What is the company car tax situation where we operate a LLP? Is this the same as a partnership ie no company car tax? Or is it like a limited company where car tax is payable. Maybe it's different again? Please advise.

Answered by Phil Verity, Mazars

An LLP is a corporate entity and the liability of the partners is limited to the amount of their subscribed capital. LLPs have to file accounts and returns at the Registrar of Companies. Partners in an LLP are generally treated for tax purposes in the same way as partners in any other partnership. Partners in LLPs are broadly subject to the same restrictions on reliefs for losses, interest, etc as limited partners under the Limited Partnership Act 1907 and there may be restrictions on the amount of loss set off against other income.

Regarding the partners cars capital allowances and the computation of expenses allowable against income for tax purposes will follow those of partnerships. So there might be restrictions in the tax computations on the car expenses dependent upon the proportion of business mileage, but there will not be an individual company car benefit for the partners. However there may be a company car benefit for your employees if you employ staff with company cars.