Vehicle mileage allowance versus Buying a van

neil298

Could anyone advise me please, On behalf of my son who is self employed and been claiming 45P per mile on his last few tax returns. If he sold his company the van that he personally owns already and puts bills through for the year rather than claim the 45p mile allowance,Is this possible? Is he doing anytyhing wrong if he say buys his own van for £5000 (worth a bit more) and introduces it into his business and claims on next years return for the running/repair costs?. If not I assume he could just buy another van for the business and sell his own?

pjs493

He can sell the van he already owns to the business so long as he uses an accurate market rate. Anything more or less could raise eyebrows of impropriety. 

If he sells the van to the business, he will have to account for any personal use of the van. 

It’ll be worth him working out, based on previous tax years, if he would have been better off claiming the .45p per mile or having all costs covered by the business as a depreciating business asset. Bear in mind that typically as vehicles age they need more money spent on up keep. 

Grumpy_chap

Does he work with his own Ltd Company?  I assume he does and not sole-trader.

If the Ltd Company owns the van, he will incur a BIK liability for income tax.

DullGreyGuy

pjs493 said:

He can sell the van he already owns to the business so long as he uses an accurate market rate. Anything more or less could raise eyebrows of impropriety. 

He is self employed, there isn't a business to sell the van to, unless the OP is incorrect and he is instead a director/shareholder of a Ltd 

neil298 said:

Could anyone advise me please, On behalf of my son who is self employed and been claiming 45P per mile on his last few tax returns. If he sold his company the van that he personally owns already and puts bills through for the year rather than claim the 45p mile allowance,Is this possible? Is he doing anytyhing wrong if he say buys his own van for £5000 (worth a bit more) and introduces it into his business and claims on next years return for the running/repair costs?. If not I assume he could just buy another van for the business and sell his own?

You really need to confirm if he is a sole trader or director/shareholder of a company.

Assuming he is self employed he can either use the simplified method of 45p/25p a mile and not claim anything for the purchase or running of the van. Alternatively he can claim a proportion of the actual costs based on the split between personal and business use the van has. So if it's 50/50 then he can claim capital allowance on 50% of the value and claim 50% of the expenses of running the vehicle. Obviously when he sells it then 50% goes through the books as revenue.

You cannot switch back and forth though, as soon as you have claimed a capital allowance you are locked into claiming actual expenses and blocked from simplified expenses of the mileage rate

pjs493

Sorry. I assumed it was a limited company. I think I was too busy thinking about my own stuff. As others have mentioned above, it’s different if he’s self-employed. 

Grumpy_chap

pjs493 said:

Sorry. I assumed it was a limited company. I think I was too busy thinking about my own stuff. As others have mentioned above, it’s different if he’s self-employed. 

I cannot see that the OP has clarified on the self-employed (sole trader) or Ltd Co. distinction.  
There is inconsistency in phraseology in the OP and no further comment:

neil298 said:

Could anyone advise me please, On behalf of my son who is self employed and been claiming 45P per mile on his last few tax returns. If he sold his company the van that he personally owns already and puts bills through for the year rather than claim the 45p mile allowance,Is this possible? Is he doing anytyhing wrong if he say buys his own van for £5000 (worth a bit more) and introduces it into his business and claims on next years return for the running/repair costs?. If not I assume he could just buy another van for the business and sell his own?

pjs493

Grumpy_chap said:

pjs493 said:

Sorry. I assumed it was a limited company. I think I was too busy thinking about my own stuff. As others have mentioned above, it’s different if he’s self-employed. 

I cannot see that the OP has clarified on the self-employed (sole trader) or Ltd Co. distinction.  
There is inconsistency in phraseology in the OP and no further comment:

neil298 said:

Could anyone advise me please, On behalf of my son who is self employed and been claiming 45P per mile on his last few tax returns. If he sold his company the van that he personally owns already and puts bills through for the year rather than claim the 45p mile allowance,Is this possible? Is he doing anytyhing wrong if he say buys his own van for £5000 (worth a bit more) and introduces it into his business and claims on next years return for the running/repair costs?. If not I assume he could just buy another van for the business and sell his own?

This may have been why I was confused and gave the advice I did. 

neil298

Apologies but i can confirm he is self employed sole trader and not VAT registered or a  Limited company. Thank You for your help