What can i claim for?

GarethK

I am about to start a new business venture and as a result of this, have had to purchase a works van, like most commercial vehicles this attacts a price plus VAT element.

As i wont be VAT registered as i wont be earning enough, what can i claim back for? How is the purchase cost of the van offset against my tax?

TIA

Gareth

Wookey

Simply put profit/loss. Everything you need/buy for your business is a loss, everything you earn is a profit, at the end of the tax year the loss is taken away from the profits leaving either a loss or a profit dependent on how good your turnover is or how bad your startup expenses have been. If your still in profit then whatever is leftover has your presonal allowances subtracted and this remaining amount is then taxed at 20/40%.

GarethK

Ok i think that makes sense, so everything i buy, for example the tools needed for the job, i can subtract £2000 off my profit (for sake of arguement £30k a year), therefore my profit is £28k, minus my van, another £3300 making £24.7k. I then tax the remaining profit @ 20%?

I will be getting an accountant at some point but not yet! So need to get this in my head!

I will also be doing approx 20k a year mileage in the van, approx £300 a month in fuel, i believe you also have an allowance for this, a higher rate up to 10,000 miles and a lower rate thereafter?

Thanks for your response!

Gareth

Wookey

Pretty much, there are a few complexities but any good accountant should be able to keep you right. Keep a record of everything you spend money on that relates to your business and it's also a good idea to have a seperate bank account thru which all your business transactions go thru. As for your mileage you can either claim per mile or for all fuel/maintenance costs incurred but not both.

GarethK

Wookey wrote: »

Pretty much, there are a few complexities but any good accountant should be able to keep you right. Keep a record of everything you spend money on that relates to your business and it's also a good idea to have a seperate bank account thru which all your business transactions go thru. As for your mileage you can either claim per mile or for all fuel/maintenance costs incurred but not both.

I claimed per mile with my previous job but think i will look into the latter route as i wont be using my own car this time, it will be a dedicated tool for the job i'll be doing.

Thanks again!

Gareth

ks62uk

As the van is a business asset ie owned by the business you have to account for the actual business costs incurred ie fuel, tax, service/repairs, insurance and you can claim capital allowances on the cost of the van.

The mileage rates of 40p (1st 10k miles per year) and 25p (over 10k) are only to be used where you own the van personally as they are meant to be a reimbursement of estimated costs of using a personal vehicle for business/work (including depreciation).

For a guide to other tax deductible expenses, the best free one I have seen so far is at http://tips.hrbs.biz/running-your-business/tax-deductible-expenses/ . There are also guides on starting a business.

As well as getting a business bank account you could use a cashback/rewards credit card in your name to buy your fuel, tools etc and clear it monthly . If you get one that is only used for the business that would make your book keeping easier and clearer should HMRC ask to see your records. The better your records, the lower your accounting fees should be.