Buying a new van,tax allowance?

[Chris]

Hi,

I am looking at getting myself a new van on a hire purchase agreement, payments will be £230 a month for 4 years.

Will i be able to claim this back off the tax each year? So 230 x 12 per year?

or can i only claim back the initial cost in this tax year?

Thanks

 

[telectrix]

afaik, taxman allows you 25% of purchase price 1st year, then 25% of 75%, then 25% of 50%, then final 25%. (percentages referred to purchase cost), then it's written off as a "dead" asset, but you may have to pay tax if you sell it. if the HP has interest charges, you should be able to claim against that also.

 

[Chris]

afaik, taxman allows you 25% of purchase price 1st year, then 25% of 75%, then 25% of 50%, then final 25%. (percentages referred to purchase cost), then it's written off as a "dead" asset, but you may have to pay tax if you sell it. if the HP has interest charges, you should be able to claim against that also.

Thanks, so if van was say 10,000 i could claim
25% of 10,000 year 1
25% of 7500 year 2
25% of 5000 year 3
Then 25% of 2500 year 4?

 

[telectrix]

think i got it wrong. should work out 25% of purchase per year, so it's considered worthless end of year 4. never bought a newish van. always something under a grand, splashed out on the hiace tough 4 years ago. was 1.5k. ..still it cost me nowt over 4 years except oil, brake pads, and 2 tyres. due for it's 2nd cambelt now @ 203600 miles.

 

[Chris]

I bought myself a combo for 1800 3 months ago and its just died on me!

 

[Octopus]

I would say talk to your accountant ....

 

[Octopus]

think i got it wrong. should work out 25% of purchase per year, so it's considered worthless end of year 4. never bought a newish van. always something under a grand, splashed out on the hiace tough 4 years ago. was 1.5k. ..still it cost me nowt over 4 years except oil, brake pads, and 2 tyres. due for it's 2nd cambelt now @ 203600 miles.

I've given you a disagree as it's a percentage of the remaining value each treat, not the initial value

 

[Chris]

I would say talk to your accountant ....

I dont have an accountant just yet, i work for a company and have just recently registered myself to napit to sign off my own work and build up to eventually go self employed! Thats the dream anyway..

need to find myself a good accountant

 

[HappyHippyDad]

With regards to income tax (not VAT) you have 2 choices related to motor expenses. Whichever choice you make you have to stick with for the rest of the time the business is running.

1. Claim for all expenses, including purchase of van (90% sure).

Or

2. Claim 45p (changeable) per mile travelled, but no other costs related to van.

I find the latter far easier.

 

[telectrix]

I've given you a disagree as it's a percentage of the remaining value each treat, not the initial value

so i was right first time, wrong when i changed mymind. i can live with it. .

 

[Squid]

think i got it wrong. should work out 25% of purchase per year, so it's considered worthless end of year 4. never bought a newish van. always something under a grand, splashed out on the hiace tough 4 years ago. was 1.5k. ..still it cost me nowt over 4 years except oil, brake pads, and 2 tyres. due for it's 2nd cambelt now @ 203600 miles.

You spoil that van, that £15:02 in fuel is more than you spent on the wife for Christmas/Valentines/Birthday/Anniversary rolled in to one ;o))))))

 

[Chris]

With regards to income tax (not VAT) you have 2 choices related to motor expenses. Whichever choice you make you have to stick with for the rest of the time the business is running.

1. Claim for all expenses, including purchase of van (90% sure).

Or

2. Claim 45p (changeable) per mile travelled, but no other costs related to van.

I find the latter far easier.

Thats helpful thanks, so its easier as you just count your mileage and claim 45p each as opposed to keeping repair receipts/purchase costs/ fuel receipts?

 

[Baddegg]

Thats helpful thanks, so its easier as you just count your mileage and claim 45p each as opposed to keeping repair receipts/purchase costs/ fuel receipts?

Only for the 1st 10k miles after that it drops to 25p

 

[Taylortwocities]

I dont have an accountant just yet, i work for a company and have just recently registered myself to napit to sign off my own work and build up to eventually go self employed! Thats the dream anyway..

need to find myself a good accountant

My accountant saves me more each year than I pay him.
He'll be able to tell you the best way to claim for capital outgoings and how to deal with this sort of thing

.......... so its easier as you just count your mileage and claim 45p each as opposed to keeping repair receipts/purchase costs/ fuel receipts?

 

[HappyHippyDad]

Thats helpful thanks, so its easier as you just count your mileage and claim 45p each as opposed to keeping repair receipts/purchase costs/ fuel receipts?

Yep , but note Baddegg's reply above.

edit... actually, I'm not sure about keeping receipts for petrol. I just keep a mileage record for all work related business, as if you use this method then the tax man is not interested in what you have actually spent on fuel, they just want to know the milage you have done.

I keep meaning to look into some sort of app on the phone that could record all work trips

 

[Carl S]

Speak to your accountant, this is how I worked it.

25% per annum depreciation:


Initial cost 1000

Year one 1000 – 250 = 750

Year two 750 – 187.5 = 563

Year three 563 – 140.75 = 422.25

Year four 422.25 – 105.56 = 316.69

Year five 316.69 – 79.17 = 237.52

And so on


The asset never reaches £0. If you sell then the price you get is deemed profit.

 

[Carl S]

*******************

 

[Rpa07]

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Language Timothy!


Sorry Father!

 

[Squid]

Yep , but note Baddegg's reply above.

edit... actually, I'm not sure about keeping receipts for petrol. I just keep a mileage record for all work related business, as if you use this method then the tax man is not interested in what you have actually spent on fuel, they just want to know the milage you have done.

I keep meaning to look into some sort of app on the phone that could record all work trips

You could use fuely as a starter.

 

[Baddegg]

Yep , but note Baddegg's reply above.

edit... actually, I'm not sure about keeping receipts for petrol. I just keep a mileage record for all work related business, as if you use this method then the tax man is not interested in what you have actually spent on fuel, they just want to know the milage you have done.

I keep meaning to look into some sort of app on the phone that could record all work trips

I just use the previous years mot cert to record the mileage....only use my van for business

 

[123]

It amazes me the amount of self employed/sole traders that have no handle on their accounts.

The simplified 45p then 25p per mile is great if you use a car and subby a lot, but if buying/leasing a van and using it for business use it's terrible imo. I use the simplified method if I take the family car to do quotes, as the van is all business use I put all costs on it through on it. Worth noting the 45p per mile has been the same since the 90's, but the cost of everything has gone up a lot since then.

 

[Deleted member 26818]

afaik, taxman allows you 25% of purchase price 1st year, then 25% of 75%, then 25% of 50%, then final 25%. (percentages referred to purchase cost), then it's written off as a "dead" asset, but you may have to pay tax if you sell it. if the HP has interest charges, you should be able to claim against that also.

That’s old hat now.
Can claim up to £50 grand in one go.
I believe it was 40% in the first year then 25% of what’s left each year after.

As for the hire purchase payments, it’s up to you how you file them as expenses.
You can either put in the total purchase price plus interest in the first year, or just put the monthly payments down as they occur.

Remember that whichever way you do it, you only get 20% of what you claim back.

If you happen to be VAT registered, then you can also claim that.

If you claim the mileage allowance, then you can’t claim the purchase price, as the mileage allowance is for using a private vehicle for work.
The allowance covers fuel, tax, maintenance and insurance.

Actually, it was 44p a mile up until about 5 or 6 years ago.

Depreciation only really applies if you are counting the vehicle as an asset, and when you come to dispose of the vehicle.
If you manage to sell the vehicle for more that it has depreciated to, the Tax man will not come knocking on your door for a slice of the profit.
However if you sell it for less, he may come asking for an explanation.

 

[Risteard]

Writing down allowance.

 

[Octopus]

I dont have an accountant just yet, i work for a company and have just recently registered myself to napit to sign off my own work and build up to eventually go self employed! Thats the dream anyway..

need to find myself a good accountant

Are you registered with HMRC for SE via your private work?

 

[Chris]

Are you registered with HMRC for SE via your private work?

No i have not registered with them yet, i only have a few months trading under my belt but i have kept a record of all jobs done so far and have a separate account ive been paying 20% of my profits into.

i believe i have until january to register and declare last years tax returns? Just trying to find a local accountant to sort everything out for me

 

[Octopus]

No i have not registered with them yet, i only have a few months trading under my belt but i have kept a record of all jobs done so far and have a separate account ive been paying 20% of my profits into.

i believe i have until january to register and declare last years tax returns? Just trying to find a local accountant to sort everything out for me

You need to save for class 4 ni too so that's about 9% on top of the tax ...