sole trader van purchase, what can I claim back?

[F3rritt]

Hi hope this is the right place to ask?

I'm a sole trader for the past 15 yrs (NON-VAT registered). I've had 3 vans (all cash bought) in that time and and never claimed anything back in my accounts. I'm thinking of now getting a new van and want the best option so I can claim it back as an expense. I do basic cash accounting (total income/expenditure). If I lease a van will the monthly payments be 100% claimable.

The only reason I'm asking is because I'm being told by some van brokers it will be and others it wont be.

Thanks

[Eric Mc]

Have you got an accountant?

That is EXACTLY what an accountant would be able to explain to you.

The answer to your question is "it depends". There are differing rules depending on whether the van is -

bought outright or by a bank loan
bought using an HP
leased under a finance lease
leased under an operating lease

[F3rritt]

Eric Mc said:

Have you got an accountant?

That is EXACTLY what an accountant would be able to explain to you.

The answer to your question is "it depends". There are differing rules depending on whether the van is -

bought outright or by a bank loan
bought using an HP
leased under a finance lease
leased under an operating lease

No I don't have an accountant, I do a self assessment. The van will leased using a "contract hire" agreement.

[Eric Mc]

You really need an accountant

[jeremyh1]

Eric Mc said:

Have you got an accountant?

That is EXACTLY what an accountant would be able to explain to you.

The answer to your question is "it depends". There are differing rules depending on whether the van is -

bought outright or by a bank loan
bought using an HP
leased under a finance lease
leased under an operating lease

Why do you answer so many posts if you don understand the topic yourself

[Stella Tortoise]

jeremyh1 said:

Why do you answer so many posts if you don understand the topic yourself

Ego I suspect.

His contribution on this topic seems unusually unhelpful though.

[Mr Pointy]

Stella Tortoise said:

jeremyh1 said:

Why do you answer so many posts if you don understand the topic yourself

Ego I suspect.

His contribution on this topic seems unusually unhelpful though.

You'll find that Eric has a very complete understanding of the topic & in this case the only correct answer is for the OP to take professional advice. Given that he has already admitted he hasn't claimed back any of the cost of his previous vehicles it's quite clear he doesn't understand accounting or how to go about filling in his tax return correctly. It's likely an accountant will save him more than the charges for the advice wil cost.

[Eric Mc]

Couldn't have put it better myself. How to go about buying a business vehicle is one of the most common queries I receive from clients and most of them have saved some money by following the advice I gave.

[F3rritt]

Mr Pointy said:

Stella Tortoise said:

jeremyh1 said:

Why do you answer so many posts if you don understand the topic yourself

Ego I suspect.

His contribution on this topic seems unusually unhelpful though.

You'll find that Eric has a very complete understanding of the topic & in this case the only correct answer is for the OP to take professional advice. Given that he has already admitted he hasn't claimed back any of the cost of his previous vehicles it's quite clear he doesn't understand accounting or how to go about filling in his tax return correctly. It's likely an accountant will save him more than the charges for the advice wil cost.

I fully understand accounting and how to file my tax returns correctly. Just because I'VE CHOSEN not to claim anything back on my past 3 van purchases doesn't mean otherwise.

I asked a simple question and to be honest got a simple answer which is fine with me. Maybe after 15 years of doing my own accounts I'll let somebody else do them or maybe I won't, who knows. But please don't assume I don't know what I'm doing!

[jeremyh1]

Do you rally think that this is the place for business advice

[Eric Mc]

Why did you feel you needed to ask the question if you already knew what the answer was. The very fact that you asked the question indicates to me that you do not fully understand accounts or taxation. Indeed, I have been a qualified accountant for almost 40 years and there are aspects of accounting that even I wouldn't claim to fully understand.

Explain what you think you can claim for and I'll tell you whether you know what you are talking about or not.

I listed above the areas where both the accounting AND the tax treatment will be different but I what I didn't do was go into detail on the actual WAY in which they differ because that would end up being quite a long and complex post that a non-accountant might have some issues understanding.

THAT is why I suggested you talk to an accountant who would be able to explain how the acquisition of assets using different types of finance arrangements can have significant impact on -

how the assets are shown in the accounts

what tax reliefs are available on the assets

and, if appropriate, the different VAT treatments.

[stevensdrs]

OP. You would likely get better advice asking Google. Just lease the van and then you can claim the total lease cost as long as the van is used solely for your business. If you buy it, it becomes an asset of your business and then you are into accounting for depreciation and there are various complicated ways of doing this. Advice can be had from the HMRC website or you can even phone them.

[Eric Mc]

stevensdrs said:

OP. You would likely get better advice asking Google. Just lease the van and then you can claim the total lease cost as long as the van is used solely for your business. If you buy it, it becomes an asset of your business and then you are into accounting for depreciation and there are various complicated ways of doing this. Advice can be had from the HMRC website or you can even phone them.

Exactly why he should talk to an accountant.

If he bought outright he could claim 100% Annual Investment Allowance (AIA) and maybe even be able to get HMRC to refund him some tax and NI he had already paid.
He could also claim 100% AIA if acquired under a bank loan or HP.

He COULD NOT claim such an allowance if leased.

By talking to an accountant he could go through the options so that the best route for him personally could be worked out.

For tax purposes, in most cases depreciation is a non factor and can be ignored.

[Deesee]

Op Eric has tried to send you in the right direction here, accountant advise is best.

General rule of thump though, you should be able to claim 100% of it back, but and or however that might be right/not right for you...

Speak to an accountant, and find what works for you ....

[F3rritt]

Eric Mc said:

Why did you feel you needed to ask the question if you already knew what the answer was. The very fact that you asked the question indicates to me that you do not fully understand accounts or taxation. Indeed, I have been a qualified accountant for almost 40 years and there are aspects of accounting that even I wouldn't claim to fully understand.

Explain what you think you can claim for and I'll tell you whether you know what you are talking about or not.

I listed above the areas where both the accounting AND the tax treatment will be different but I what I didn't do was go into detail on the actual WAY in which they differ because that would end up being quite a long and complex post that a non-accountant might have some issues understanding.

THAT is why I suggested you talk to an accountant who would be able to explain how the acquisition of assets using different types of finance arrangements can have significant impact on -

how the assets are shown in the accounts

what tax reliefs are available on the assets

and, if appropriate, the different VAT treatments.

I felt the need to ask the question as ive been getting conflicting information back from the lease companies.

If you think I have/had a problem with your reply/advice then I don't. What I have a problem with is the assumption that I have a lack of understanding on my accountancy because I haven't claimed back any of my last van purchases & I'm asking about leasing a work vehicle. I fully understand my accounts and how to do them as of right now... But when/if I lease a vehicle then this understanding may possibly change.

You seem a busy gentleman so I won't take up your time and explain what I "think" I can or can't claim back, plus as you say us non-accountants may have difficulty understanding your replies and if this was the case how foolish would I look 🤨

Thanks for the sound business advice.

[2 sMoKiN bArReLs]

Eric Mc said:

For tax purposes, in most cases depreciation is a non factor and can be ignored.

But just to double underline your helpful advice Eric, in some cases it can be! It's a bit rude of others to give Eric a hard time for giving best & accurate advice.

HM Revenue & Customs are very good at taking a simple subject and make it complicated. Things are seldom as straightforward as they should be!

(Speaking as an Ex FD of a commercial vehicle dealership)

[Eric Mc]

2 sMoKiN bArReLs said:

But just to double underline your helpful advice Eric, in some cases it can be! It's a bit rude of others to give Eric a hard time for giving best & accurate advice.

HM Revenue & Customs are very good at taking a simple subject and make it complicated. Things are seldom as straightforward as they should be!

(Speaking as an Ex FD of a commercial vehicle dealership)

That's why I said "most cases". The problem with these situations is the underlying position regarding who actually owns the asset. When an asset is owned outright then there is no real doubt as to where ownership lies. If an asset is acquired under some sort of HP or finance agreement, then the question of ownership is more complicated and HMRC has tried to tailor the allowable tax relief claims to the nature of ownership of the asset.

In a way, it's not really HMRC's fault as the legal aspects of "title" are determined by mercantile law rather than by tax rules.

[2 sMoKiN bArReLs]

Eric Mc said:

2 sMoKiN bArReLs said:

But just to double underline your helpful advice Eric, in some cases it can be! It's a bit rude of others to give Eric a hard time for giving best & accurate advice.

HM Revenue & Customs are very good at taking a simple subject and make it complicated. Things are seldom as straightforward as they should be!

(Speaking as an Ex FD of a commercial vehicle dealership)

That's why I said "most cases". The problem with these situations is the underlying position regarding who actually owns the asset. When an asset is owned outright then there is no real doubt as to where ownership lies. If an asset is acquired under some sort of HP or finance agreement, then the question of ownership is more complicated and HMRC has tried to tailor the allowable tax relief claims to the nature of ownership of the asset.

In a way, it's not really HMRC's fault as the legal aspects of "title" are determined by mercantile law rather than by tax rules.

Exactly...I am agreeing with you, you know?

[Eric Mc]

I know - and thanks.

[Stella Tortoise]

I don't know why people bother asking for a little advice here anymore.

Some posters who probably know the answers decide to post but negatively, maybe they are just fed up with bowing down in their real life and come to pistonheads to even the balance by belittling others?