Can You Buy a Personalised Number Plate Through Your Business?
Many business owners wonder if purchasing a personalised number plate through their company offers tax advantages. Could it be classified as a business expense or even an asset? Inthis blog, we’ll break down the tax implications and what HMRC says about buying a private plate for your business or personal vehicle.
What is an "Intangible Asset"?
Before we dive in, it’s important to understand what an "intangible asset" is. Intangible assets are valuable items that don’t have a physical form, like trademarks or personalised number plate.
You may be thinking that the personalised plate is physical, but remember you are buying the licence to use the registered number. The physical plate itself is a symbol of the non-physical licence.
Do Personalised Plates Offer Tax Savings?
Limited Companies
If you run a limited company, buying a personalised number plate may not save you tax directly. When purchased through your company, the payment transfers from your company's balance sheet into a new intangible asset.
However, if you were thinking about buying the plate personally, doing it through the company could save you in income tax, which ranges from 8.75% to 45%, as long as it qualifies as business expense.
Another potential benefit is if your company is VAT-registered. In that case, you will be able to reclaim VAT back.
Sole Traders and Partnerships
Since 2002, sole traders and partnerships cannot claim tax relief on intangible assets like personalised licence plates. However, if the licence plate is wholly and exclusively for business purposes—such as clearly promoting your business name—there may be a case for claiming it as a legitimate business expense. It’s important to note that if the licence plate is on a personal vehicle or if it doesn’t directly advertise your business, proving its business use could be challenging. To strengthen your case, make sure the plate is clearly linked to your business, and keep detailed records of its use.
What Makes a Plate a Business Expense?
For a personalised plate to qualify as a business expense, it needs to have a direct connection to your business. Examples include:
- A plate with your company’s name, like 'BLU3 ROCK3T'
- Plates that mention your industry or area, such as TAX H3LP
The idea is that the plate should serve as advertising. A plate that just includes initials (e.g., BRA1234) may not qualify.
On the other hand, plates featuring personal names or unrelated terms (like DAV3 5MITH) could be seen as personal use. In such cases, if your business pays for it, the cost may besubject to benefit-in-kind tax.
What About Personal Vehicles?
Yes, your business can buy personalised plate for a personal car, but it’s tricky. HMRC will likely see its personal use, which means it will result in a benefit-in-kind tax charge.
Buying Plates for Business Vehicles
It’s possible to buy personalised plate for a business-owned vehicle like a work van or car. However, you must show a clear link to your business. If the vehicle is alsoused personally, there could be benefit-in-kind tax implications.
Are Personalised Plates Business Assets?
Yes, personalised plates are usually classified as intangible assets. They’ll appear on your balance sheet rather than in the profit and loss statement. However, just because it’s an asset doesn’t mean it automatically leads to income tax or corporation tax savings. Essentially, you’re transferring one intangible asset(money) into another (your new plates), so there’s no immediate tax benefit from this alone.
Can a Personalised Plate Be a Good Investment?
(Disclaimer: This should not betaken as financial advice, and you should do your own research and due diligence before making any financial decision)
A personalised number plate often holds its value and could even be appreciated if the right demand exists. For example, plates like HR EXP3RT, IT H3LP, or R3WIRE could attract attention across industries, driving up their value. However, plates that only apply to your specific business may not see the same increase in value.
Can You Claim VAT on Private Plates?
You can reclaim VAT on personalised number plate if it’s clearly linked to your business. But remember, the connection must be obvious and directly related to the company.
Final Thoughts
Whether you’re buying a plate to showcase your brand or as an investment, it’s important to understand the tax implications. Always consult an expert accountant before making a purchase toensure compliance and maximise any potential benefits.
Need Expert Advice on Personalised Licence Plates?
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