small business vehicle question?

edited 30 November -1 at 1:00AM in Small Biz MoneySaving
6 replies 1K views
manhattanmanhattan Forumite
1.5K Posts
Uniform Washer
edited 30 November -1 at 1:00AM in Small Biz MoneySaving
hi,
i will be purchasing a nearly new van for my small business in the very near future.

i will not be vat registered as i dont think i will turn over 58k+ and i will be a sole trader.

if i purchased a van for 7k+vat,can anything be claimed back from this as it will be classed as a company asset?

can anyone give me an example of how any tax refund would work on this?

if in the future i do become vat registered is it possible to claim the vat back?

many thanks,
m.

Replies

  • Savvy_SueSavvy_Sue Forumite
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    I'm answering this because no-one else has, not because I have any great expertise, and I hope that if I say something wrong it will at least cause someone more knowledgeable than me to leap in and correct me!

    I think a van would be a capital asset, which would mean that you could offset some of what it cost you against your income for tax purposes over a period of a few years. I suspect the technical term for this is depreciation. If you don't yet have an accountant, that's the kind of person you need to tell you how much, how long etc. That's the best I can do for questions 1 and 2.

    I don't think you would be able to get any VAT back if you subsequently registered for VAT. Edit - I was quite wrong about this, which doesn't surprise me in the least! See later post from Cash99!

    If no one more knowledgable than me turns up, a polite PM to Vansboy might be worthwhile: this isn't his strict are of expertise either, I'm quite sure, but he ought to know something about buying vans!
    Still knitting!
    Completed: TWO adult cardigans, 3 baby jumpers, 3 shawls, 1 sweat band, 3 pairs baby bootees, 2 sets of handwarmers, 1 Wise Man Knitivity figure + 1 sheep, 2 pairs socks, 3 balaclavas, multiple hats and poppies, 3 peony flowers, 4 butterflies ...
    Current projects: pink balaclava (for myself), seaman's hat, about to start another cardigan!
  • manhattanmanhattan Forumite
    1.5K Posts
    Uniform Washer
    thanks savvy_sue.

    im just trying to get my head round the basics of the vat and tax thing on this,before i purchase a van.

    if i contact a local accountant would they give me a bit of free advice over the phone?or is that being a bit cheeky???lol
  • FinishrichFinishrich Forumite
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    Try and find an accountant through a friends recommendation, then you won't feel so cheeky phoning them up. But I'm quite sure most will offer an initial meeting free of charge, lets you explain what you're going to be doing and they can let you know what they can do for you and what it'll cost!
  • Savvy_SueSavvy_Sue Forumite
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    Part of the Furniture 10,000 Posts Name Dropper
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    I agree with Finishrich! If you already have questions about VAT and tax and depreciation you are going to need an accountant, I think, and it's worth getting one sooner rather than later because mistakes in this area can be very expensive!
    Still knitting!
    Completed: TWO adult cardigans, 3 baby jumpers, 3 shawls, 1 sweat band, 3 pairs baby bootees, 2 sets of handwarmers, 1 Wise Man Knitivity figure + 1 sheep, 2 pairs socks, 3 balaclavas, multiple hats and poppies, 3 peony flowers, 4 butterflies ...
    Current projects: pink balaclava (for myself), seaman's hat, about to start another cardigan!
  • cash99cash99 Forumite
    269 Posts
    The vat will form part of the cost of the van, as you are not registered. If you register within 3 years of buying the van, and you still have it, then you can claim back the Vat then.

    You can claim 25% ( or possibly 50% depending on the avialability of first year allowances) of the cost of the van against your income in the first year.

    You do need to get an accountant, but this is a business decision, not a tax one.
    if i had known then what i know now
  • What I've been advised to do (by my accountant, but the Inland Revenue seem to agree on their website), is to just claim a mileage allowance.
    I claim 40p per mile for the first 10,000 miles per year, thereafter 25p per mile (or 45p / 30p if I'm taking an extra passenger). This means that I can't claim anything else at all to do with the car - depreciation, petrol, car insurance, repairs, original cost, etc. Certainly makes things much simpler I must say, rather than calculating depreciation / percentage of business versus personal use, etc.
    I run a cheap car (Daewoo Matiz) which cost me £5,500 brand new with a 3 year warranty. My depreciation is about £1,300 per year and I'm getting 45mpg. I'm making a lot of extra tax free money out of this rule and it's all completely legal!
    I think the Inland Revenue are trying to encourage people to use small fuel efficient cars so I'm quids in. If I had a brand new Rover 75 worth £25,000 it might be a different story.
    I can still claim for car parking expenses.
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