[MATT BATEMAN (OWC)]

I was speaking to someone yesterday about being able to offset new vehicle purchase costs aginst your tax liability. He was implying that only a certain percentage can be offset. I know its a capital cost and so is spread out over a number of years.

However, if you buy a vehicle for £20,000 and you finance this cost with £12000 HP and £8000 'cash' surely you can still offset the same amount of expenditure as if it was fully financed ? ? ?


Confused now 

[Smudger]

hi matt, my understanding is that you can you aia allowance and write all of teh van off as one expenditure - here is the link that explains it better than me

http://www.hmrc.gov.uk/manuals/camanual/ca23084.htm

[Richard Shepherd]

Van, all of it, car percentage of it and everything that goes with it eg service, tyres, diesel, tax, insurance etc

[KS Cleaning]

The interest on the finance will be tax deductable too

[MATT BATEMAN (OWC)]

The interest on the finance will be tax deductable too

Not according to the HMRC. Spoke to them an hour, interest is not tax deductible.

[MATT BATEMAN (OWC)]

hi matt, my understanding is that you can you aia allowance and write all of teh van off as one expenditure - here is the link that explains it better than me

http://www.hmrc.gov.uk/manuals/camanual/ca23084.htm

Ta 

[8weekly]

You can offset the whole purchase price in year one, but only if it is used exclusively for your work. At least that is my understanding nd I have no idea how rigid that might be if push came to shove. E.g. Could you drop a child at school on way to first job if it is entails a detour?

[MATT BATEMAN (OWC)]

You can offset the whole purchase price in year one, but only if it is used exclusively for your work. At least that is my understanding nd I have no idea how rigid that might be if push came to shove. E.g. Could you drop a child at school on way to first job if it is entails a detour?

Only if you buy it outright. if its over a number of years you cannot.

[KS Cleaning]

The interest on the finance will be tax deductable too

Not according to the HMRC. Spoke to them an hour, interest is not tax deductible.

Funny that, I took out a bank loan for a van and my accountant wanted details of the interest on the repayments, I assumed it was for tax purposes...maybe he was just being nosy

[formb]

Funny that, I took out a bank loan for a van and my accountant wanted details of the interest on the repayments, I assumed it was for tax purposes...maybe he was just being nosy

He probably wanted to know so he knew how much not to offset.

[rg1]

Off topic I know but..when buying a new van consider the VAT that is charged not only on the purchase price, but also on monthly repayments. If you are not VAT registered this can add a considerable amount to your total outlay which cannot be reclaimed.

[8weekly]

You can offset the whole purchase price in year one, but only if it is used exclusively for your work. At least that is my understanding nd I have no idea how rigid that might be if push came to shove. E.g. Could you drop a child at school on way to first job if it is entails a detour?

Only if you buy it outright. if its over a number of years you cannot.

Don't you always buy it outright? Otherwise it is leased isn't it? Not sure how HP works though. But in my case I bought mine outright, but with a loan.

[MATT BATEMAN (OWC)]

If you buy a vehicle with finance, lets say spread over 4 years, you cannot put the whole cost of the vehicle against any single given tax years liability. You can only put what you have paid out in that year against your tax liability. Which'll be a quarter of the total cost if you spread the load over 4 years. You cannot include any interest paid on the loan.

If however you buy the vehicle outright in one hit, the full cost of vehicle paid off straight away you wont be paying interest anyway but you can put the full cost of the vehicle against any given tax year I believe, although it'll probably be better to spread the cost over a number of tax years to fully appreciate the potential tax savings.

[Spruce]

Off topic I know but..when buying a new van consider the VAT that is charged not only on the purchase price, but also on monthly repayments. If you are not VAT registered this can add a considerable amount to your total outlay which cannot be reclaimed.

Since when?

[8weekly]

If you buy a vehicle with finance, lets say spread over 4 years, you cannot put the whole cost of the vehicle against any single given tax years liability. You can only put what you have paid out in that year against your tax liability. Which'll be a quarter of the total cost if you spread the load over 4 years. You cannot include any interest paid on the loan.

If however you buy the vehicle outright in one hit, the full cost of vehicle paid off straight away you wont be paying interest anyway but you can put the full cost of the vehicle against any given tax year I believe, although it'll probably be better to spread the cost over a number of tax years to fully appreciate the potential tax savings.

Confused. I was under the distinct impression that you offset the total in year one unless it is a lease.

[brianbarber]

Talk to Frank......!


Mr B

[MATT BATEMAN (OWC)]

Well I've put my deposit down today. Ill speak to my accountant when I can get hold of her. No answer today.

[rg1]

Off topic I know but..when buying a new van consider the VAT that is charged not only on the purchase price, but also on monthly repayments. If you are not VAT registered this can add a considerable amount to your total outlay which cannot be reclaimed.

Since when?

You can't reclaim VAT if you're not VAT registered.

[CleanClear]

If you buy a vehicle with finance, lets say spread over 4 years, you cannot put the whole cost of the vehicle against any single given tax years liability. You can only put what you have paid out in that year against your tax liability. Which'll be a quarter of the total cost if you spread the load over 4 years. You cannot include any interest paid on the loan.

If however you buy the vehicle outright in one hit, the full cost of vehicle paid off straight away you wont be paying interest anyway but you can put the full cost of the vehicle against any given tax year I believe, although it'll probably be better to spread the cost over a number of tax years to fully appreciate the potential tax savings.

There's a pretty simplified way  to account for vans, systems etc.. and its the Annual Investment Allowance. I think its 25k per year, you can write off in one go. Their maybe a temporary rise on the limit of it to 250k, not that it'll apply to most of us. And its probably easier and more straighforward for anyone paying cash for older secondhad vans, and maybe systems..
 I can't see anything in it to restrict you claiming, or rather using your allowance for a new van though even if it is on finance over four years or whatever. To my understanding you use the allowance and the payments for the next few years are your own worry out of your nett profits as you would have used up the allowances in the year of purchase.
 It may well be worth asking about, potetially in could put you at a loss which can be carried over too.
 http://www.hmrc.gov.uk/capital-allowances/plant.htm

[CleanClear]

Just to add, i can't see why this wouldn't work with a sole trader buying a new van on finance. You've introduced an asset to your business, you are personally liable for the asset not the business. Probably different requirements for Ltd Co status and the accounting requirements, but it should be fine for a sole trader.