SimpleReturns

Company tax returns for mechanics and garages

Reviewed by Lee Jones, Founder · Updated 16 July 2026
The short answer

If you fix cars through a limited company, whether you are a mobile mechanic working out of a van or a small garage renting a unit, the filing job is the same as for every company in the country: a Company Tax Return to HMRC and a set of accounts to Companies House, even in a year you made a loss. Your version of it has three special features: your income is labour plus the parts you fit, your biggest one-off costs are tools and diagnostic kit, and your trickiest question is the van. There is one trap to watch: using a company van or car for your own life as well as the work, because HMRC taxes that as a perk.

Official source. This guide is a plain-English summary of official GOV.UK guidance, not advice. The authoritative source is Company Tax Returns on gov.uk. Always rely on that over our summary.

What counts as your company's income?

Everything a customer was charged for the work. For a garage or mobile mechanic that is really two things added together: the labour, and the parts you fit. Both are the company's income.

Parts trip people up, so get this one right. If you buy £300 of parts from your supplier and charge the customer £300 for them, that £300 coming in is income and the £300 going out is a cost. Record both totals in full. Do not quietly cancel them against each other, because your return needs the true figure for what you charged and the true figure for what you spent, not the gap between them. The same goes for diagnostic fees, callout charges and any markup you add to parts: if the customer paid it, it is income.

Your tax bill is then worked out on the profit, which HMRC calculates its own way rather than just copying the accounts figure. Small companies pay 19% on profits up to £50,000, and bigger profits move towards 25%.

One thing to watch while we are on money coming in: a busy garage that fits a lot of parts can pass £90,000 of takings quicker than it feels, because the parts you charge out count towards that line too. If your company's taxable takings go over £90,000 across any rolling 12-month period, not just your accounting year, it has to register for VAT. That is a separate job from this return, and if you are hovering near the line it is worth a quick word with an accountant to time it right.

What can your company claim?

The rule behind every cost is simple: it has to be for the business. For a garage or mobile mechanic the usual list looks like this:

  • Tools and diagnostic equipment. Ramps, air tools, a diagnostic scanner, a wheel balancer, a tyre machine, your sockets and torque wrenches. These count as equipment and machinery, and an allowance lets the company claim the full cost against its profit in the year you buy it, up to a very high yearly limit. That is a real help in a year you invest in a pricey scanner. Our guide on claiming tools and equipment goes deeper.
  • The van. A van bought for the business is treated the same way: the company can claim its cost against profit in the year of purchase, and when the company owns the van its fuel, servicing, tyres and insurance for the work are company costs. That full first-year treatment covers vans, but not cars.
  • Parts and consumables. Everything you buy to do the job: the parts themselves, plus oil, brake fluid, filters, rags, gloves and cleaner.
  • Premises. If your garage rents a workshop unit, the rent, the business rates, and the electricity, heating and water for the workshop are company costs.
  • Insurance. Motor-trade cover, public liability, and cover for customers' cars while they are on your premises or in your care are business costs the company claims.

Keep the receipts. The claim is only as good as the paper behind it.

The trap: using a company van or car for your own life

Plenty of mechanics hear "the company can pay for the van" and start using it as the family runaround too, or move a personal car onto the company's books. Here is what that actually does. A company van used only for the work, with nothing more than the odd insignificant detour like grabbing a paper on the way in, creates no extra personal tax. But once you use it privately in a real, regular way, HMRC treats that private use as a perk, and the company then has extra paperwork and a tax charge to deal with on it.

Two things follow from that. First, a cost that is part business and part your own private life is not something you split down the middle and claim the "business half" of, the way a sole trader would. For a company it does not work like that: the cost is either for the business, or it becomes a taxable perk for you personally. Second, if the van doubles as your own car, or you want the company to own a car at all, talk to an accountant before you commit. The perk rules for a company vehicle depend on the exact vehicle and how it is used, and that is a calculation worth paying someone to get right.

What does filing look like with us?

At year end your company has two deadlines to keep apart. Your accounts go to Companies House within 9 months of your year end, and the Corporation Tax itself is due at about the same time, 9 months and 1 day after the year end. Your Company Tax Return, the CT600, then goes to HMRC within 12 months of the year end. A late return costs £200 from the very first day. HMRC's own free filing service has closed, so every company now files through commercial software.

SimpleReturns is built for businesses like yours. You upload the company bank statement and answer a few plain-English questions, no accounting words. You review every figure on one screen before anything is sent, then we file both returns for you: the tax return to HMRC and the accounts to Companies House. It is free to start, no card needed, and filing costs £99 flat for both.

Common questions

Do the parts I fit count as my company's income?

Yes. If you buy £300 of parts and charge the customer £300 for them, the £300 coming in is income and the £300 going out is a cost. Record both totals in full and do not cancel them against each other, because the return needs the true figure for what you charged and the true figure for what you spent.

Can I claim tools and diagnostic equipment in full?

Ramps, air tools, a diagnostic scanner and a wheel balancer count as equipment and machinery, and an allowance lets the company claim the full cost against its profit in the year you buy it, up to a very high yearly limit.

Is a company van taxed if I use it privately?

A company van used only for the work, with nothing more than the odd insignificant detour, creates no extra personal tax. But real, regular private use is treated as a perk, and the company then has extra paperwork and a tax charge on it.

When does my garage have to register for VAT?

If your company's taxable takings go over £90,000 across any rolling 12-month period, not just your accounting year, it has to register for VAT. The parts you charge out count towards that line too, so a busy garage can pass it quicker than it feels.

Want your garage's return filed for you?

You upload the company bank statement and answer a few plain-English questions, no accounting words. We sort the labour-and-parts income and the tool and van costs, work out the profit and the Corporation Tax, and build both filings: the tax return for HMRC and the accounts for Companies House. You review every figure before anything is sent. Free to start, no card needed, and £99 flat covers both.

Start your return

And if your van doubles as the family car, or your takings are near the VAT line, we will flag it plainly so you can get an accountant to sort that one part.

General guidance, not advice. This guide explains how the rules generally work for small UK limited companies. It isn't tax advice for your specific situation, if you're unsure, check with us or an accountant.