Most tax-efficient way to buy a new van

Supersonos

I run a limited company that needs a van. I bought my current van outright, but it's now nearly 10yrs old and I could do with a new one.

What's the most tax-efficient way to buy one? Cash from my company, leasing or a business loan repaid monthly?

I would like to spec it which makes me thing something like Vanarama is a bad idea? I assume they have a few versions of each van rather than being able to select various options.

Pennywise

Tax relief over the full life of the van will be the same however you buy it, so go for the cheapest option over the life which would usually be buy outright.

If you buy (inc via a bank loan or HP) you can claim the full cost against your profits in year of purchase, so it accelerates the tax relief, but only as long as your profits are higher than the van cost.

If you lease, you get the annual costs deducted from the annual profits, so you get tax relief spread over the life of the van instead of in the year of purchase.

Corporation tax is set to go lower, so if you claim it all now, you'll get more tax relief than in future years when CT reduces from current 19% down to 17%.

However, if you work out that leasing works out a lot cheaper (unlikely) given your circumstances, i.e. mileage, life expectation of van etc., then you should probably go with the cheapest option.

AdrianC

Your accountant can give you the most tailored advice.

Supersonos

Pennywise wrote: »

Tax relief over the full life of the van will be the same however you buy it, so go for the cheapest option over the life which would usually be buy outright.

Ok, thanks for this. It's kind of what I figured but everyone else I know leases which made me wonder if I was missing something.

I guess the money isn't earning any interest in my business account, so no point in having it in there any longer than necessary, so seems outright is the best way.