Buying a van for personal use through limited company as a director

bailey_uk

Hi folks, as a director of a construction company I am asking for advice on whether its beneficial to buy a new van for business as well as leisure use, through our limited company.

The initial benefits being the VAT being claimed back and a good trade discount from the dealership.

I understand that there is a benefit in kind tax to the tune of £3500? Can anyone explain this a bit better to me, as I cant seem to find any layman terms online?
Would this be taken out PAYE each month and every year the company still owns the van?

The VAT is about £6000 so in less than two years this would then become more expensive way of doing things?

Wasn't sure whether to post this here or the motoring section but any tips or experience in this would be gratefully received thanks 

Petriix

Buy an electric van and the BIK is minimal (and it qualifies for 100% first year capital allowance). 

Jeremy535897

There are a lot of factors to consider. If you are comparing the purchase of a van personally to the purchase of a van by the limited company, you have to factor into account its cost. If you buy it, you are buying it out of taxed income. You can only claim business mileage. You personally suffer the loss when you sell it for less than you bought it. You cannot recover the VAT on the purchase or any subsequent costs. You have to tax it, service it and insure it out of taxed income.

The company can claim the full cost and all subsequent costs against corporation tax. It will pay tax when it sells the van, and will charge VAT, but if the purchasers are going to be VAT registered the company will simply add the VAT on to its second hand value. You will pay tax on the benefit, including a separate benefit for private fuel if relevant. See:
https://www.gov.uk/expenses-and-benefits-company-vans

All vans bought by a business qualify for 100% capital allowances in the year of purchase. They don't have to be electric. The benefit however will be nil if the van has zero emissions. It's all explained in the link above if you go through all the pages.

bailey_uk

Jeremy535897 said:

There are a lot of factors to consider. If you are comparing the purchase of a van personally to the purchase of a van by the limited company, you have to factor into account its cost. If you buy it, you are buying it out of taxed income. You can only claim business mileage. You personally suffer the loss when you sell it for less than you bought it. You cannot recover the VAT on the purchase or any subsequent costs. You have to tax it, service it and insure it out of taxed income.

The company can claim the full cost and all subsequent costs against corporation tax. It will pay tax when it sells the van, and will charge VAT, but if the purchasers are going to be VAT registered the company will simply add the VAT on to its second hand value. You will pay tax on the benefit, including a separate benefit for private fuel if relevant. See:
https://www.gov.uk/expenses-and-benefits-company-vans

All vans bought by a business qualify for 100% capital allowances in the year of purchase. They don't have to be electric. The benefit however will be nil if the van has zero emissions. It's all explained in the link above if you go through all the pages.

Thanks that helps a lot.

From what my friend has told me, the tax calculations are slightly different as a director so will look into that and then speak to the accountant. 

Jeremy535897

Some of the rules regarding the private usage of vans might be able to be taken advantage of by a director, but I don't know of any specific rules on vans that treat the tax calculation differently.