commercial vehicles and small businesses

Katie-Kat-Kins

Hi,

OH has always used his private care for business use and paid himself 40p per mile for any business miles. He is now changing his vehicle and is wondering what the advantages and disadvantages are of buying a commercial vehicle and what the advantages and disadvantages are of registering the vehicle as owned by the business.

He isn't vat registered, the vehicle will need to be used for business and personal use. It will be a 4x4, estate car or van for load space with no other adaptations needed.

any advice or suggestions?

Thanks

DCodd

http://www.hmrc.gov.uk/vans/index.htm

Above is a link to HMRC guidelines on Comapny vans and private use. Also, the taxation class of vehicles have changed too, so an estate car or a 4x4 will be classified as a petrol or diesel car and not a light goods vehicle and so will incur company car tax, the only grey area I know of are luxury 4x4 pickup trucks which are still classifies as light goods vehicles.

2nd_Time_Lucky

OH runs a (2 seater) 4x4 van - not a pickup! and its fab- tons of room, every expense is easily claimed against corporation tax and road tax is half that of the car version :money:

Katie-Kat-Kins

Should clarify, he is a sole trader, it isn't an incorporated company and he isn't an employee. He doesn't draw a regular wage.

I have looked at 4x4's that are classified as commercial vehicles because they have panels inplace of rear windows, as well as pick up type vehicles and "proper" vans.

He isn't looking to acquire a company car, as such, he needs a vehicle for personal use and that vehicle also needs to be suitable for business use which includes visiting clients/suppliers/retailers and also taking goods to trade shows etc. So far he has had a normal small car and paid himself 40p a mile for business use and paid the expenses for the vehicle out of private funds, but buying a bigger vehicle more suitable for the business will incur higher running costs so he is reviewing whether this is the best option.

The business is not particularly profitable at present but is steadily growing.

chalkie99

Minor point, not really answering your question but, the mileage rate is now 45p (up to 10,000 miles, 25p thereafter) so make sure you are getting the full amount!

As to the van situation - you are not VAT reg so cannot work that to your advantage and I find that road tax and insurance are more expensive for vans than cars. For example, I have a car and van by the same manufacturer with the same engine size and spec. The road tax is £20 a year for the car and £210 for the van. Insurance is more than double on the van too (maximum No Claims on both).

Savvy_Sue

Others will know more about this than me, but I thought that if the van was registered as a company vehicle, then it could NOT be used for personal use without major tax implications.

I don't know if that's sole traders, or if it's only company owned vehicles, but it would be as well to clarify that before making any decisions.

steve1980

Savvy_Sue wrote: »

Others will know more about this than me, but I thought that if the van was registered as a company vehicle, then it could NOT be used for personal use without major tax implications.

I don't know if that's sole traders, or if it's only company owned vehicles, but it would be as well to clarify that before making any decisions.

You are correct Sue. If the van goes out on a "pleasure" trip then it's tax time

texranger

another think to look at even if a vehicle is commercial and owned by the business, if this is kept at a residential address you cant claim all expenses against the business (so i was told at one of those tax seminars by HMRC) as it is assummed that if you need to pop out on a personal journey it could be easier for you to use the business vehicle as its the closest to the road parked in your drive.

Katie-Kat-Kins

texranger wrote: »

another think to look at even if a vehicle is commercial and owned by the business, if this is kept at a residential address you cant claim all expenses against the business (so i was told at one of those tax seminars by HMRC) as it is assummed that if you need to pop out on a personal journey it could be easier for you to use the business vehicle as its the closest to the road parked in your drive.

The business is run from home.....

Katie-Kat-Kins

So are we basically saying just buy any type of vehicle that fits the bill, register it to OH in his name and continue to pay mileage at 45p per mile and forget having something that "qualifies" as a commercial vehicle.

texranger

Katie-Kat-Kins wrote: »

So are we basically saying just buy any type of vehicle that fits the bill, register it to OH in his name and continue to pay mileage at 45p per mile and forget having something that "qualifies" as a commercial vehicle.

Give the HMRC a call and see what they suggest