If you are a director of a limited company then there are three options open to you on income tax. The company could buy or lease the car and pay for all the running costs and fuel. Then you get charged to tax depending on the particular make and model of the vehicle.
Or you could own the car and pay for all the running costs and fuel and claim a mileage allowance from the company. This allowance is tax free if it is not more than 45 pence per mile for the first 10,000 miles, 25 pence per mile for any mileage in excess of that.
Or the company could own the car and pay for the running costs but not pay for the fuel. Then you can claim a lower mileage rate depending on the type of fuel and the cc of the car. This rate varies between 10 pence and 19 pence per mile.
Which is best? You cannot tell without doing the sums. It all depends on your mileage and the car. Generally the more mileage you do, the better off you are with claiming mileage. You do need to keep a log of your business mileage, though!
