Buying a truck

Pennywise

lordbase wrote: »

If your question is whether you are better off buying the van or not buying the van - you are spending £7,500 to get tax relief of £2,175 (income tax at 20% = £1,500 + NIC at 9% = 675). So overall by buying the van you are £5,325 WORSE off.

However, if you need to get a new van then you might as well claim the tax relief on it.

But you need to compare the 45p per mile mileage rate if applicable to you. If you do lots of business miles, it's usually better to claim the approved mileage rate instead of the actual costs if you're buying a cheap/old vehicle.

lordbase

Pennywise wrote: »

But you need to compare the 45p per mile mileage rate if applicable to you. If you do lots of business miles, it's usually better to claim the approved mileage rate instead of the actual costs if you're buying a cheap/old vehicle.

Definitely - there are really two comparisons to do:

1. Capital allowances + actual costs, ie fuel, insurance, servicing, tax, MOT, repairs. This requires keeping receipts for all costs.

Or

2. 45p per business mile for the first 10,000 + 25p per mile thereafter. This just requires a log of business mileage.

If you claim the 45/25p then you are not entitled to claim capital allowances as the 45p includes an element for the depreciation. However, as you are entitled to claim both the capital cost and running costs, unless business miles are very high it is usually favourable to claim the CAs as this gives a nice up front tax relief.

The other thing to consider is if he buys the van at the end of his accounting period and claims the 45p per mile he won't be entitled to any relief that year as he's done no miles in that vehicle (albeit he's entitled to relief for previous mileage in other vehicles). If he goes via route 1 he gets to claim relief on the car, insurance and any immediate costs in the current year - and as we know, cashflow is king for small businesses.