Self employed, but have been offered a van...what are the implications?

frub5

hi, I am a self employed builder, lately i have been doing alot of sub-contracting for a property developer. He has offered to rent me a van for approx the same money as my running costs for my rather old transit. I am very tempted,but am not sure how this will affect my tax....I will be responsible for all diesel cost, but maintence,tax insurance will be handled by them.
He has said that i can have the van written, as long as his company is also on the van.
what do you think???

Andybez38

Sounds to me he is offering you the van for his own tax reasons. He probably will then pocket the money you give him for the rental of the van.

frub5

I know he will be doing this for his own tax reasons, but will there be any implications for me? I know i wont be able to claim any tax relief on the van, but will i be taxed on it..as it is a "perk" a bit like a company vehicle...only not!

LittleVoice

I don't see why you would be taxed on it as long as you are paying a reasonable sum to lease it from the developer.

If he were just letting you use it, then, as this could be seen as providing something which you use in your work, it could look as though you were an employee of his. But this is not the case as you are paying for it - you could be leasing it from anyone.

fengirl_2

The rental money will be tax deductable, as will the fuel, in the same way as if you were leasing from a regular company. Make sure you get something in writing!

inmypocketnottheirs

fengirl wrote: »

The rental money will be tax deductable, as will the fuel, in the same way as if you were leasing from a regular company. Make sure you get something in writing!

Yes you will need to draw up a rental type of agreement to protect both parties. If you pay a realistic rental, not say £20 a month, then I am sure the revenue will not be a problem. But if it is a dodgy deal made to hide a freebie, then expect problems!

Remember if the firm that you are renting the vehicle from is VAT registered, then it would be wise to charge VAT on the rental, even if the person renting is not VAT registered. It all makes the deal look more legitimate, which of course it is!

I have done this myself before. My accountant did approve the deal, as did the accountants of the firm renting me the vehicle. Here is a copy of the Agreement that we used:

HIRE AGREEMENT FOR THE HIRE OF


DESCRIPTION OF THE GOODS

Make & Model cc’s New Used Date 1st reg VIN Reg no


OWNER DETAILS CUSTOMER DETAILS

This vehicle is owned by: This vehicle is hired by:




HIRE PERIOD & FINANCE DETAILS

Fixed period of 1 year commencing

Initial Rental Rental charge per period
Including full maintenance
At or prior to the Commencement Date

Subsequent Rentals during Hire Period:

Amount When Payable Inc Maintenance

Payable four weeks after our signature
on this agreement followed by ten further payments


The Owner is not liable for any parking tickets, speeding tickets or any other relevant offence. The Customer will immediately deal with any notice served in respect of any offence regarding this vehicle

___________________________________ ___________________________

Customer’s Signature Date


OWNER’S SIGNATURE CUSTOMER’S SIGNATURE
Signed on behalf of the Owner

___________________________ ___________________________
This is a Hire Agreement, the goods do not become your property and you must not sell them.

Date

If the OP would like me to email a blank of the agreement just send me a PM with an email address and I will do by return.

HTH