[JohnL]

If you buy a second hand van purely for business purposes what is the situation re tax relief - ie is it the same as for purchasing a new van?

Thanks for any responses.

JohnL

[JM123]

as far as I'm aware you are allowed 25% against tax but someone else may clarify this for you.

[neil100]

More or less.

If you buy a brand new van you can claim 40% against tax as your first year allowance, After the first year it reverts to 25% a year.

A secondhand van you are allowed 25% against tax.

Unlike a car,With a new van or secondhand van you can put your total running costs against tax, fuel, roadtax,Insurance, servecing and repairs.

Nel

[JohnL]

Yes, but on a new van you claim the 40% of the value, then in ongoing years it is 25% of the balance? - Yes?

And it is only 25% of the price of a second hand van. Is that a one-off or spread over a term?

[JM123]

no its 25% per year so if van costs £5000, year 1 tax allowance on it £1250, so after year 2 its 25% of £3750 = £2812.50 etc etc.

[JohnL]

thanks JM

[Trevor Knight]

If you buy a second hand van purely for business purposes what is the situation re tax relief - ie is it the same as for purchasing a new van?

Thanks for any responses.

JohnL

25% each year until the depreciation value had reached zero.

As said before, plus 100% of running costs.

[Paul Coleman]

If you buy a second hand van purely for business purposes what is the situation re tax relief - ie is it the same as for purchasing a new van?

Thanks for any responses.

JohnL

25% each year until the depreciation value had reached zero.

As said before, plus 100% of running costs.

I think you need to be careful about offsetting 100% of running costs.  It depends on your circumstances.  There was a year or two when I ran a van but also had a personal car too.  Then it was fine to offset 100% of van running costs against tax.  However, I currently have a van as my only vehicle which I use for work and as my private vehicle.  For this I apportion the usage.  Obviously the majority of the vehicle is used for work and I offset accordingly.  If ever investigated, such an issue would probably come up.  Also, I only offset the same proportion of interest as well on the loan.  Actually, it's a bit more complex than that for me.  I took the loan for the vehicle and system in one loan.  Therefore, the system part of the loan is obviously a 100%er but the van part of the loan is apportioned.

[Pj]

 It makes no difference to the tax man whether it's a new van or a used one, it is new to you, so, You can choose to offset 25% or 40% of the purchase price in the tax year you bought it(providing that you are using it 100% for business).  After the first year you can offset 25% of it's written back value.

eg:  Van cost  £5,000.  1st year 40% = £2000 tax relief
2nd year Van value £3,000(or whatever) 25% = £750 tax relief
3rd year Van value £2,250(or whatever) 25% = £562.50 tax relief
4th year Van value £1,687.50(or whatever) 25% = £421.87 tax relief
5th year Van value £1,265.63(or whatever) 25% = £316.40 tax relief

Total tax relief = £4,050.77

eg:  Van cost £5,000.  1st year 25% = £1,250 tax relief
2nd year Van value £3,750  25% = £937.50 tax relief
3rd year Van value £2,812.50 25% = £703.12 tax relief
4th year Van value £2,109.38  25% = £527.34 tax relief
5th year Van value 1,582.04  25% = £395.51 tax relief

Total tax relief = £3,813.47

Even at those estimates the difference is only £40 a year tax relief.
 It really depends on your financial situation at the end of the first year of purchase, your choice

[JohnL]

Thanks guys. 

Shiner - if you run your own vehicle like I do for business and personal use you are allowed to charge .42 pence per mile for the work mileage only. You are not supposed to claim anything outside of that.   

I am considering a cheap second hand van purely for business use and the question of tax relief on off-setting the capital expenditure is an unknown area for me.

JohnL

[Paul Coleman]

Thanks guys. 

Shiner - if you run your own vehicle like I do for business and personal use you are allowed to charge .42 pence per mile for the work mileage only. You are not supposed to claim anything outside of that.   

I am considering a cheap second hand van purely for business use and the question of tax relief on off-setting the capital expenditure is an unknown area for me.

JohnL

I thought there was a choice between claiming straight mileage or claiming a proportion of the actual expenses.  I have always done the latter and the accountant is fine with that.  For instance, if the actual running costs of my van are £3,200 in a year and I reckon that 75% is business usage then I can claim tax relief on £2,400.  Is that so or not?

[DASERVICES]

John,

I use the 40p per mile rule which works for me as the tax man gives me money back 

[Pj]

Don't know why I bother sometimes

[JohnL]

Shiner - my local tax office advised me a vehicle used for personal and business can only charge a 'per mile' rate used for the business which is 42p and this has to be substantiated by mileage figures covering both private and business.

pj - thanks mate but this part of the thread has now centered on running costs for single vehicle use for both business and personal. Your reply which is extremely helpful relates to a capital relief tax on a business vehicle only which is what I was after. So its  hugs and stuff to you pj         Thanks again.   

[Pj]

 

[Paul Coleman]

Shiner - my local tax office advised me a vehicle used for personal and business can only charge a 'per mile' rate used for the business which is 42p and this has to be substantiated by mileage figures covering both private and business.

Thank you for your response.
That's a new one on me as I thought we had the choice of which way to do it and weren't allowed to change it until the vehicle was changed.
It looks like I need to have a discussion with my accountant.
I will get my books completed in April and go to visit him with the paperwork.  There are a few things I need to discuss with him so I will just add this to the list.

[JohnL]

Definitely have a word with your accountant because not all tax advisers know all the answers.

I have just had a top up tax advice of nearly £400 plus a daily interest  'cus of a balance of payment advice of which I never received. It has strangely appeared however on my online tax assessment statement but not advised to me in writing so I was unaware of it. I am now expecting to be told I should check online regularly for any amendments - you can guess what my answer to that will be! and in spades!   

[craig jwc]

Inland Rev told me that for Capital Gains you claim 40% for the 1st year if the vehicle is new or secondhand then 25% on the following years till the value drops to nothing.

The 40 pence per mile (which i do) means you can't claim anything for the van as the it covers everything. They said you can't even claim for the cost of the van if you use the 40ppm as it's inclusive.

Craig

[JohnL]

The 40 pence per mile (which i do) means you can't claim anything for the van as the it covers everything. They said you can't even claim for the cost of the van if you use the 40ppm as it's inclusive.


Yes, that is how I understand it too, except the figure I use is 42p a mile.   

[Paul Coleman]

The 40 pence per mile (which i do) means you can't claim anything for the van as the it covers everything. They said you can't even claim for the cost of the van if you use the 40ppm as it's inclusive.


Yes, that is how I understand it too, except the figure I use is 42p a mile.   

I had always thought that the 40p (or 42p) per mile looked slightly but not overly generous but had not realised it included the van cost.  Now it looks like a really bad deal.  I suppose it works out alright if you are a very high mileage user but my business mileage is in the 9,000 - 11,000 miles per year bracket.  It would only take one or two big repairs to leave you out of pocket I think.