Are daily car rental expenses tax deductible?

By Nigel Morris, senior manager global employer services, Deloitte & Touche LLP

FOR many small businesses the use of partners to assist with important irregular tasks is essential – whether it is the auditor or daily rental company.

It would be costly to procure and run (say) a large estate car for the few occasions per year that it is required to move large loads.

Similarly, it would not be cost effective to provide an employee with a car for 365 days a year when they are only required to travel to visit customers three times a month.

The solution may therefore be daily rental – renting a car only for those periods it’s required.

However it may concern many businesses that the full costs can’t be reclaimed. Or that a taxable benefit-in-kind may apply.

When expenses are 100% reclaimable

But if the vehicle is used 100% for business and any private use is incidental – for example, an employee takes the car home in the evening to facilitate an early start/late finish – there should be no exposure to a benefit-in-kind company car tax charge or restriction.

This applies for short (say) one to three day hires once a month where use is purely business.