Newly Self Employed - Buying a Van

Anders0n

Basically I started self employment back in April as a plumber working out of my car and its now got to point where I need a van.

What I'm asking is what is the most tax efficient way of buying a van these days? I have searched extensively but without much luck as what you can claim back appears to have changed.

Say I make about 26000 this year, that puts my taxable profit at 19525, which will result in a tax bill of 3905, I think I've got that right.

Now I'd much rather that was used on business assets like a van and such than go to the tax man. I believe 100% is claimable through AIA?

Say I went a bought a van cash for £2000 with a receipt ect, would that be claimable or does it have to be bought out of my business income?

I looked at leasing a van, roughly 200 per month which seems attractive especially if i can claim 100% back.

I'm just trying to weigh up all my options here, I don't want to go splashing out and not get tax relief for it!

Many thanks to anyone who can help.

tortoise2010

Hi, how did you get on? Which option did you go for and do you have any advice for me...I'm in the same situation.

Many thanks!

antrobus

Anders0n wrote: »

Now I'd much rather that was used on business assets like a van and such than go to the tax man. I believe 100% is claimable through AIA?

As long as you spend less than £50,000, you can claim the lot as your Annual Investment Allowance. (So long as it's not a car.)

Anders0n wrote: »

Say I went a bought a van cash for £2000 with a receipt ect, would that be claimable or does it have to be bought out of my business income?

Makes no difference. As long as you can show that you actually purchased the asset in the tax year, you can claim capital allowances - doesn't matter how you paid for it.

chrismac1

It's not just about tax - my advice to clients in this sort of situation is to make sure the tax tail does not wag the dog.

If the leasing deal is at the right rate and without a load of silly fees, it saves you more tax and probably you get a better van which in turn creates a better customer impression. And a £2k van is likely to be high mileage and high maintenance. One breakdown at the wrong time could cost you a lot of lost sales, or just put a lot of pressure on you to make up lost time on a job.

So weigh up all the options including tax. There are £50k of AIAs if you buy outright or on hire purchase. The interest element of any HP deal is claimable, and the leasing costs on any lease where you don't buy outright. But watch all those hidden fees on any deal and walk away if you can't get the right one.