Hi,
We've recently set up a Contract hire Lease van with Ford.
As we don't own the commercial vehicle how do i account initial upfront payment and monthly payments, is this just a supplier invoice? or because the P11D value is £41k do i need to set it up a different way?
Also the finance is a rate of 50% reduced VAT due to being used personally aswell.
Any help would be greatly appreciated
Hi Becky
As this is contract hire, its basically "renting" the vehicle your company doesn't own the vehicle so it doesn't impact the balance sheet. So all payment should go as an expense in the profit and loss account, you would normally set up a separate sub account called Contract Hire Lease under Motor expenses.
I wouldn't bother putting on a supplier invoice, but put the payment through directly with an "Expense" or through the bank feed if that is connected. Remember to get the VAT correct as there is a 50% reduction in the amount of input tax which can be recovered in respect of lease rental payments on a car or van if the vehicle is used privately. You can claim 100% if it is used exclusively for business. This is only on the finance element of the lease. So if you have a fully managed contract hire , the invoice will be split between a finance element and a service element.
I would normally do this by splitting the payment like this:-
E.G. Contract hire for car or van fully managed
Total cost say £120 including VAT being £80 finance lease and £20 service , fully managed and £20 VAT.
Enter as :
Contract Hire - Finance £40 20% VAT = £8
Contract Hire - Finance £48 E 0% VAT = £0
Contract Hire - Service £20 20% VAT = £4
Total Net = £108
Total VAT ( claimed) = £12
Total Invoice = £120
Dont try and do anything clever like setting up a 10% VAT rate which I have seen, which is wrong.
For Plld Purposes keep a record, perhaps use the new Tag feature to set one up called PllD to enable you to easily run a report at the end of the tax year for your Plld, that is the only time the list price of the vehicle will be relevant, it wont impact your books at all.
I hope this helps
Martyn A Smith A.F.A, M.I.P.A
Institute of Financial Accountants
Certified Gold Quickbooks Trainer and Accountant
www.quickbookstraininguk.co.uk
As the monthly payment will be the same for the length of the lease ( normally first and last payment differ) then you can set the monthly payment up as a recurring transaction which will then save you the trouble of doing it every month and will match up with the bank fee if you use that.
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