Newly Self Employed

GtiTory

My Fiancee went self employed with a CIS card last year.
He has an accountant and gave him numerous reciepts last tax year who arranged a rebate for him as they were for tools etc.

My o/h boss dropped the bombshell that he now wants him to have his own van.
My o/h owns both a car and a motorbike so with that, can he physically purchase a van lets say £5000 and get that back via rebate next year as he pays his tax kinda PAYE with his CIS card.
Set up costs for a van
£5000 van
£1000 insurance
£120 tax
£40 annual mot

How does that outlay affect him as this is a Business only vehicle and will be business 100% of the time.
What would happen if he bought the van on lease purchase, so over the 3 years he would pay for the full balance of the van. What happens with claiming the payments back at the end of the tax year?

And what happens when he wants to buy a new laptop? for business purposes?
Does he get the Tax relief or will he get a rebate of the full amount
I already do his book keeping, ie: a spreadsheet of incoming and ourgoing with corresponding reciepts.

Hope someone can help as I do not understand the HMRC website

Pennywise

No, he won't get the full costs back.

At best, he'll get tax relief on his costs, which will probably amount to 20% and 9% national insurance. So for every £1,000 he spends on business costs, his overall tax bill will be £290 less, meaning it only costs him £710.

texranger

GtiTory wrote: »

this is a Business only vehicle and will be business 100% of the time.

this is a sticky situation as it depends if the van will be parked at his home address.

when i started i went on one iof the many HMRC 1 day courses and if a vehicle is purchased for a business only, but is parkerd at your residential premises you cant claim the whole amount back (fuel etc) which you can if it is parked at a business premises.

the reason for this, just say you need to nip to the local supermarket for milk and the van is nearest to the road, so you just nip in the van, this is not business use, so their is too much temptation to use the van for personal journeys

GtiTory

His home address is his business address...
He owns a car that he would pop to the shops in that.
What if he had his business address at his mum and dads and lived at home with me... could that be a way around it?

BoGoF

GtiTory wrote: »

His home address is his business address...
He owns a car that he would pop to the shops in that.
What if he had his business address at his mum and dads and lived at home with me... could that be a way around it?

Yes.......if he want's to commit fraud

Savvy_Sue

GtiTory wrote: »

His home address is his business address...
He owns a car that he would pop to the shops in that.
What if he had his business address at his mum and dads and lived at home with me... could that be a way around it?

BoGoF wrote: »

Yes.......if he want's to commit fraud

I was going say: Genuine question, but would it be fraud if he was using a different address as his 'business' address? eg he has an accountant, so use the accountant as his biz address. I know that would mean all letters etc going to the accountant, but something to consider and discuss.

But then I re-read this:

texranger wrote: »

this is a sticky situation as it depends if the van will be parked at his home address.

when i started i went on one iof the many HMRC 1 day courses and if a vehicle is purchased for a business only, but is parkerd at your residential premises you cant claim the whole amount back (fuel etc) which you can if it is parked at a business premises.

So I'm going to re-phrase my genuine question: would it be fraud if he kept the van parked at his business address (say parents or accountant)? And (to me) the answer is 'no', because the fraud BoGoF points out is based on him living and parking the van at the same address, even if he's 'manipulated' his business address.

But I do not know if HMRC ever check up on whether a business vehicle 'goes home' at all, at all, at all. And I suspect they might.

It's all very well to say he's got a car and he'd use that for going shopping, but it's very easy when the car is off the road to think "I'll just use the van". Or if you've got a large item of furniture to move, or something to pick up from IKEA, or DIY materials for home - well what's the point of having a van parked outside (or round at mum and dad's) if you can't USE it for useful things like that?

GtiTory

Savvy_Sue wrote: »

It's all very well to say he's got a car and he'd use that for going shopping, but it's very easy when the car is off the road to think "I'll just use the van". Or if you've got a large item of furniture to move, or something to pick up from IKEA, or DIY materials for home - well what's the point of having a van parked outside (or round at mum and dad's) if you can't USE it for useful things like that?

We wouldnt use the van as I have a very high spec car which he is fully comp insured on and we use my car for most things, his car for the minority of things and motorbike for fun.
Right now his business address is his parents house as we have only just moved in together.

So currently no fraud HAS been committed.
I am referring to a breakdown of AIA?
If he purchased a van outright can he put the reciept through his books and get 100% of the van cost ie £5000
Or would he get TAX RELIEF for the £5000 or will he get DEPRECIATION?

Obviously I am searching through forums linked to google searches and there are so many mixed theories I am left here very confused!

Thanks

Savvy_Sue

Sorry, I wasn't suggesting that you had committed any fraud yet, just working through in my own mind what BoGoF had said.

I'm sorry I don't have the answer to your questions about purchasing the van, but presumably if he has an accountant he has asked or will ask them? Because the accountant knows his current situation better than we do, and can advise him on the best way to go better than we can.

GtiTory

Savvy_Sue wrote: »

Sorry, I wasn't suggesting that you had committed any fraud yet, just working through in my own mind what BoGoF had said.

I'm sorry I don't have the answer to your questions about purchasing the van, but presumably if he has an accountant he has asked or will ask them? Because the accountant knows his current situation better than we do, and can advise him on the best way to go better than we can.

I plan on ringing them later. As he will just use his car for work if we cant put the van through AIA