Buying Assets Through Your Limited Company: Cars, Property, Equipment

Buying assets through your limited company can deliver significant tax savings compared to personal purchase. Your company gets Corporation Tax relief on the cost, may recover VAT, and spreads the expense across the business. But the tax treatment varies dramatically depending on what you buy, whether there is any personal use, and how you structure the purchase.

This guide explains when buying through the company makes sense, what tax relief is available, and the pitfalls to avoid.

Why Buy Assets Through Your Company?

When your limited company purchases an asset, several tax advantages come into play:

Corporation Tax Relief

The cost of business assets reduces your company's taxable profit, saving up to 25% of the purchase price in Corporation Tax. For most equipment, you can claim 100% of the cost in year one through the Annual Investment Allowance.

Example: Your company buys £20,000 of equipment. With 25% CT, you save £5,000 in tax. The asset effectively costs £15,000.

VAT Recovery

If your company is VAT registered, you can usually reclaim 20% VAT on business purchases. A £12,000 item (including £2,000 VAT) costs just £10,000 after VAT recovery.

Combined with CT relief, a £12,000 purchase could cost as little as £7,500 net (£10,000 after VAT, less 25% CT relief).

Cash Flow Efficiency

Business purchases come from pre-tax company money. Buying personally means using post-tax income. A higher-rate taxpayer would need to earn approximately £33,000 gross to buy something costing £20,000 after income tax and NI. The company achieves the same purchase with £20,000.

Asset Ownership

Company-owned assets appear on your balance sheet, potentially improving borrowing capacity and business valuation. The company retains ownership regardless of personal circumstances.

Cars Through Your Company

Company cars have complex tax rules. The tax treatment depends heavily on the vehicle's CO2 emissions and whether it is available for private use.

Corporation Tax on Cars

Unlike other assets, cars do not qualify for the Annual Investment Allowance. Instead, CT relief depends on emissions:

Example: Your company buys a £50,000 petrol car with 120g/km emissions. You claim 6% per year (£3,000 in year one), taking many years to claim the full cost. An electric car of the same value delivers £12,500 CT relief (25% of £50,000) immediately.

Benefit in Kind Tax

If a company car is available for private use, you pay income tax on the benefit. The taxable amount is the car's list price multiplied by a percentage based on CO2 emissions.

For 2025/26:

Example: A £45,000 electric car has a BIK value of £900 (2% of £45,000). A 40% taxpayer pays £360 per year. The same value petrol car at 30% BIK costs £5,400 per year in tax.

Electric vs Petrol: The Numbers

Electric vehicles win decisively on tax:

Over a four-year ownership, the electric car saves over £25,000 in personal and company tax compared to petrol.

For detailed electric car guidance, see our complete electric company car guide.

When Personal Ownership with Mileage Beats Company Car

If you drive high business miles, claiming the 45p/25p mileage rate on a personal car can sometimes beat company car ownership. This works when:

• Business miles exceed 15,000+ per year
• You can fund the car personally
• The mileage payments exceed actual running costs

Run the numbers for your specific situation before deciding.

Property Through Your Company

Buying property through a limited company has become increasingly popular, particularly for investment properties. But the decision involves complex trade-offs.

Advantages of Company Property Ownership

Mortgage Interest Relief Companies can deduct mortgage interest as a business expense, reducing Corporation Tax. Individual landlords lost this relief between 2017-2020 and now only get a 20% tax credit.

Corporation Tax vs Income Tax Company profits are taxed at 19-25% Corporation Tax. Individual rental income faces income tax at 20-45% depending on your overall earnings.

Inheritance Tax Planning Shares in a property company can be gifted, potentially removing value from your estate. Transferring property directly incurs significant costs.

Retained Profits Profits can be reinvested in further properties without extracting them personally and paying income tax.

Disadvantages of Company Property Ownership

Stamp Duty Land Tax (SDLT) Company purchases of residential property above £40,000 face a 3% surcharge plus the standard rates. On a £300,000 property, this adds £9,000 to the SDLT bill.

Additionally, purchases over £500,000 face potential 15% SDLT if the company is connected to an individual (as most owner-managed companies are), unless exemptions apply for genuine rental businesses.

Mortgage Availability and Rates Fewer lenders offer company mortgages, and rates are typically 0.5-1% higher than personal mortgages. Arrangement fees are often higher too.

No CGT Principal Private Residence Relief If you live in the property, there is no Capital Gains Tax exemption. Individual homeowners pay zero CGT on their main home; a company pays CT on any gain.

Capital Gains on Sale Companies pay CT on property gains. Individuals may qualify for lower CGT rates (currently 18%/24% for residential property) and potentially Business Asset Disposal Relief on certain commercial properties.

Double Taxation on Extraction Getting the proceeds out of the company means paying income tax on dividends or salary, potentially resulting in higher overall tax than direct personal ownership.

When Company Property Works Best

Company ownership typically suits:

• Buy-to-let investors building a portfolio and reinvesting profits
• Higher-rate taxpayers whose personal rental income would be taxed at 40%+
• Long-term holders not planning to extract profits personally for many years
• Those with existing property companies adding to an established structure

Personal ownership typically suits:

• Your main residence (company ownership loses CGT exemption)
• Single investment properties where simplicity matters
• Basic-rate taxpayers where the CT advantage is marginal
• Those planning to sell and extract proceeds in the short-medium term

Transferring Existing Property

Moving personally-owned property into a company triggers SDLT (at market value) and CGT (on any gain). The costs often outweigh the benefits unless the property portfolio is substantial or you have capital losses to offset.

Equipment and Machinery

General business equipment is the most tax-efficient category for company purchase.

Annual Investment Allowance (AIA)

You can claim 100% of the cost in year one for qualifying expenditure up to £1 million per year. This covers:

• Manufacturing and production machinery
• Tools and trade equipment
• Computer equipment and servers
• Office furniture and fixtures
• Commercial kitchen equipment
• Security systems
• Signage and display units

Example: Your company buys £50,000 of new machinery. The full £50,000 is deducted from profits, saving £12,500 in CT (at 25%).

Full Expensing

For new equipment exceeding the AIA limit, full expensing provides 100% relief with no upper cap. This only applies to new (not second-hand) plant and machinery.

VAT Recovery

Reclaim 100% of VAT on business equipment (assuming VAT registration and no personal use element).

Example: A £6,000 laser cutter (£5,000 + £1,000 VAT)

• VAT recovered: £1,000
• CT relief (25% of £5,000): £1,250
• Net cost: £3,750

Equipment Used Partly for Personal Purposes

If equipment has personal use, you can only claim the business proportion of capital allowances, and there may be a benefit in kind charge.

Computers and Technology

Technology purchases qualify for the same favourable treatment as equipment.

What Qualifies

• Desktop computers and workstations
• Laptops and tablets
• Monitors, keyboards, peripherals
• Printers and scanners
• Servers and networking equipment
• Mobile phones (business use)
• Software (perpetual licences)

Software Subscriptions

Monthly software subscriptions (SaaS) are treated as revenue expenditure, not capital. The full cost is deductible against profits in the period paid.

Example: Accounting software at £30/month = £360/year fully deductible.

Personal Use Considerations

If a director or employee uses company technology for personal purposes, there may be a benefit in kind charge. However, there is an exemption for:

• Mobile phones (one per employee, no BIK regardless of personal use)
• Equipment provided for business use at home, even if incidentally used personally

Practical tip: Provide one good quality mobile phone and laptop per director/employee. The exemption covers these without creating taxable benefits.

Home Office Equipment

Equipment provided for working from home (desk, chair, monitor) is generally not a taxable benefit if:

• It is provided primarily for business use
• It is necessary for the employee to perform their duties
• Personal use is incidental

Furniture and Fixtures

Office furniture qualifies for capital allowances and VAT recovery.

What Qualifies

• Desks and workstations
• Office chairs
• Meeting room furniture
• Reception furniture
• Filing and storage
• Kitchen equipment (for staff use)

Small Items

Items costing less than £500 can often be treated as revenue expenditure (immediately deductible) rather than capital. This simplifies administration without changing the tax outcome significantly.

Fixtures in Leased Premises

If you install fixtures in rented premises (fitted kitchens, lighting, shelving), you can claim capital allowances even though you do not own the building. The allowances are yours, not the landlord's.

What You Cannot Expense

Some purchases are not tax-deductible, regardless of how they are made:

Client Entertainment

Taking clients to lunch, sporting events, or providing gifts does not qualify for CT relief. The cost is "disallowable expenditure" even though it is a genuine business activity.

Exception: Staff entertainment (Christmas parties, team events) up to £150 per head per year is deductible and not a taxable benefit.

Personal Items

Clothing (unless branded uniform or protective equipment), personal grooming, and general living expenses are not deductible.

Fines and Penalties

Parking fines, speeding tickets, and HMRC penalties cannot be offset against profits.

Political Donations

Contributions to political parties are not deductible.

Non-Business Assets

Anything not used for business purposes. A boat kept for director's holidays is not a business asset simply because the company bought it.

Personal Use Implications

When company assets are available for personal use, tax consequences follow:

Benefit in Kind Tax

The personal user (director/employee) pays income tax on the value of the benefit. The amount depends on the asset type:

Employer National Insurance

The company pays 15% employer NI on the BIK value, adding to the overall cost.

Reduced Capital Allowances

If an asset has mixed business/personal use, capital allowances are restricted to the business proportion only.

Example: Mixed Use Laptop

A director buys a £2,000 laptop through the company, used 70% for business.

• Capital allowances: 70% of £2,000 = £1,400 claimable
• BIK value: 20% of £2,000 x 30% personal use = £120
• Director's tax (40%): £48/year
• Employer NI: £18/year

In practice, the mobile phone and computer exemption usually means no BIK applies to laptops provided primarily for business use, even with incidental personal use.

Practical Framework: Should You Buy Through the Company?

Use this decision tree:

1. Is it genuinely for business use?

• Yes → Consider company purchase
• No → Personal purchase only

2. Is there any personal use?

• No personal use → Company purchase is clearly better
• Some personal use → Calculate BIK cost and compare

3. What type of asset?

• Equipment/technology → Company purchase almost always wins
• Electric vehicle → Company purchase typically wins
• Petrol/diesel car → Run the numbers carefully
• Property → Complex; depends on your overall position

4. Are you VAT registered?

• Yes → Additional 20% saving on company purchases
• No → Still beneficial, but less dramatic advantage

Frequently Asked Questions

Can I buy a car through my company and avoid paying benefit in kind tax?

Only if the car has genuinely no private use. This means no commuting, no personal trips, and no availability for private use. In practice, most company cars are available for private use and attract BIK. The exception is pool cars available to multiple employees and kept at business premises overnight.

Is it worth buying property through a limited company if I only have one buy-to-let?

For a single property, the costs and complexity often outweigh the benefits. Higher SDLT, more expensive mortgages, and annual filing requirements add up. Company ownership typically becomes worthwhile with portfolios of three or more properties, or for higher-rate taxpayers with significant rental profits.

Can I transfer my personal car to the company?

Technically yes, but it rarely makes sense. The company would buy the car at market value (creating a personal capital gain), then you would pay BIK on ongoing private use. Starting fresh with a company-purchased electric vehicle is usually more tax-efficient.

What happens to company assets when I close the company?

Assets are either sold (with proceeds distributed to shareholders) or transferred to shareholders at market value. Transfers to shareholders are treated as dividends equal to the market value, creating a tax liability.

Can my company buy equipment that employees use at home?

Yes. Equipment provided for business use at home is generally not a taxable benefit if necessary for the job. Laptops, monitors, desks, and chairs for home working do not usually trigger BIK.

Do I need to keep assets for a certain period to claim capital allowances?

There is no minimum holding period. However, if you sell an asset after claiming allowances, the sale proceeds may create a "balancing charge" that adds back some of the relief to your taxable profits.

Can I claim capital allowances on second-hand equipment?

Yes. The Annual Investment Allowance applies to new and second-hand assets alike. Only "full expensing" (for amounts over the AIA limit) requires new purchases.

What records do I need to keep for company assets?

Maintain an asset register showing: purchase date, description, cost, supplier invoice, and any private use percentage. Keep records for at least six years after the relevant accounting period.

Is leasing better than buying for company vehicles?

Leasing has advantages: lower upfront cost, predictable monthly expenses, included maintenance, and 50% VAT recovery on payments. Purchasing offers 100% FYA for electric vehicles and builds company equity. For electric vehicles, the tax treatment is favourable either way. Run comparisons for your specific situation.

What if HMRC queries my company asset purchases?

Keep evidence that purchases are genuinely for business purposes. Invoices, business use records, and clear rationale for purchases all help. HMRC can enquire into any expense, but well-documented legitimate business assets rarely cause problems.

How AccountsOS Helps Track Company Assets

Managing company assets involves recording purchases, claiming the correct allowances, and handling any BIK reporting. AccountsOS automates this process.

Automatic Asset Recognition

Upload a receipt for equipment or technology and AccountsOS identifies it as a capital item, categorises it correctly, and ensures the appropriate allowances are claimed.

Capital Allowances Tracking

See exactly how much AIA you have claimed and how much remains. Get year-end reminders about unused allowance.

BIK Calculations

For assets with personal use, AccountsOS calculates the benefit in kind value and tracks it for P11D reporting.

Plain English Queries

Ask:

• "How much capital allowances can I claim this year?"
• "What's the tax cost of putting my car through the company?"
• "Should I buy or lease the new equipment?"

AccountsOS provides answers based on your actual company data.

Tax Impact Visibility

Every purchase shows its tax impact immediately. Buy a £10,000 piece of equipment and see your estimated CT liability drop by £2,500.

Key Takeaways

1. Equipment and technology are almost always better purchased through the company. 100% AIA plus VAT recovery makes the tax treatment highly favourable.

2. Electric vehicles have exceptionally good treatment: 100% FYA for CT, 2% BIK, and full lease deductibility. Petrol and diesel cars have much less generous rules.

3. Property requires careful analysis. Company ownership suits buy-to-let portfolios and higher-rate taxpayers, but the SDLT surcharge and extraction costs can outweigh benefits.

4. Personal use creates tax charges. If an asset is available for private use, expect benefit in kind tax and employer NI.

5. Keep records. Document business purpose, retain invoices, and track private use percentages where relevant.

For more on capital allowances, see our comprehensive capital allowances guide. For vehicle-specific guidance, read our electric car through limited company guide and car vs mileage allowance comparison.

Tax rules change frequently. This article reflects UK tax law as of January 2026. Always verify current rates with HMRC or consult a qualified accountant for advice specific to your situation.