Bringing a private commercial vehicle into a business

[V8mate]

If I buy a (bona fide!) commercial vehicle privately and then later start a Ltd company (and take on a director role), is there a clean and efficient way for me to beneficially bring my privately owned commercial vehicle into the company?

Or is the ability to claim a mileage allowance on all business miles done in my private vehicle a greater benefit than any other scheme would derive?

[Eric Mc]

Previously purchased assets can be brought into a limited company by the director. The normal accounting treatment is to "debit" the fixed assets with the introduced asset and "credit" the director's loan account. The question is at what value the asset should be introduced?

Am I right in assuming that this vehicle has not been used in a previous sole trader business where you were the sole trader?

[V8mate]

Eric Mc said:

Am I right in assuming that this vehicle has not been used in a previous sole trader business where you were the sole trader?

Correct. Never used in connection with any business.

Do you think there would be an overall benefit to bringing it into the business. Or would I do better to keep it as an 'employee's own vehicle'?

[Countdown]

V8mate said:

Correct. Never used in connection with any business.

Do you think there would be an overall benefit to bringing it into the business. Or would I do better to keep it as an 'employee's own vehicle'?

It depends on the value of the vehicle and the business mileage that you will be doing. As employee's own vehicle you would get 45p per mile but wouldn't be able to claim fuel/insurance/maintenance/capital allowances. These might be significant if the vehcle is new but if it's a 25 year old Nissan Sunny that does 10,000 miles per annum you might be better off keeping it as your own vehicle and pay yourself a mileage allowance.

[V8mate]

Thanks. Chances are that it'd be less than/around a year old.

[Trailhead]

If it is a commercial vehicle ie a van, rather than a car, the ltd co can claim 100% write off against profits and the BIK is quite low. Therefore, most commercial vehicles, if they are of value, are best being introduced into the company. You will also then be able to claim fuel, insurance, repairs, etc too.

[V8mate]

Brilliant, thank you

[V8mate]

How would the vehicle be treated for VAT? Any scope to incorporate any element of the (private) purchase VAT into the company's input VAT?

[Eric Mc]

Assuming the company is VAT registered, if it bought the vehicle from a VAT regsistered commercial vehicle seller, then it could reclaim the VAT.

However, as it is acquiring the vehicle from a non VAT registered individual, then there is no VAT to reclaim.

[V8mate]

Fair enough!