Newly Self Employed - Buying a Van
Discussion
Basically I started self employment back in April as a plumber working out of my car and its now got to point where I need a van.
What I'm asking is what is the most tax efficient way of buying a van these days? I have searched extensively but without much luck as what you can claim back appears to have changed.
Say I make about 26000 this year, that puts my taxable profit at 19525, which will result in a tax bill of 3905, I think I've got that right.
Now I'd much rather that was used on business assets like a van and such than go to the tax man. I believe 100% is claimable through AIA?
Say I went a bought a van cash for £2000 with a receipt ect, would that be claimable or does it have to be bought out of my business income?
I looked at leasing a van, roughly 200 per month which seems attractive especially if i can claim 100% back.
I'm just trying to weigh up all my options here, I don't want to go splashing out and not get tax relief for it!
Many thanks to anyone who can help.
What I'm asking is what is the most tax efficient way of buying a van these days? I have searched extensively but without much luck as what you can claim back appears to have changed.
Say I make about 26000 this year, that puts my taxable profit at 19525, which will result in a tax bill of 3905, I think I've got that right.
Now I'd much rather that was used on business assets like a van and such than go to the tax man. I believe 100% is claimable through AIA?
Say I went a bought a van cash for £2000 with a receipt ect, would that be claimable or does it have to be bought out of my business income?
I looked at leasing a van, roughly 200 per month which seems attractive especially if i can claim 100% back.
I'm just trying to weigh up all my options here, I don't want to go splashing out and not get tax relief for it!
Many thanks to anyone who can help.
Thanks for the comprehensive replies.
The buying outright/loan/hp option I understand fully, I take it the only downside to doing this compared to leasing is the depreciation?
As for leasing/contract hire ect, this still confuses me somewhat...
I had a quote from Peugeot which was a finance lease, £200 pm inc vat for 46 months + deposit of £600 and then a final balloon payment of £3800.
So with that I'd only be able to get tax relief for the interest on the monthly payments?
After paying that balloon payment, do I own the van or not? I am assuming I don't as that would be a lease purchase?
Its all a bit confusing at the moment, I'm keen on the idea of having a new van and not a second hand old one but I'm still at a bit of a loss as to what my best option is!
The buying outright/loan/hp option I understand fully, I take it the only downside to doing this compared to leasing is the depreciation?
As for leasing/contract hire ect, this still confuses me somewhat...
I had a quote from Peugeot which was a finance lease, £200 pm inc vat for 46 months + deposit of £600 and then a final balloon payment of £3800.
So with that I'd only be able to get tax relief for the interest on the monthly payments?
After paying that balloon payment, do I own the van or not? I am assuming I don't as that would be a lease purchase?
Its all a bit confusing at the moment, I'm keen on the idea of having a new van and not a second hand old one but I'm still at a bit of a loss as to what my best option is!
I keep reading everywhere that finance lease and contract hire are 100% claimable?
Like here for example: http://www.crusadervans.co.uk/van-leasing-explaine...
And here: http://www.vansales.com/van_sales_blog/index.php/v...
Like here for example: http://www.crusadervans.co.uk/van-leasing-explaine...
And here: http://www.vansales.com/van_sales_blog/index.php/v...
So HP doesnt qualify for AIA then?
That article says many times that a lease purchase does not qualify, yet the example they give does? Nothing appears to be different in my eyes, unless I am missing something?
I may have read this wrong, but is it also trying to say that with a finance lease the lessee is treated as the owner for the duration of the contract?
Sorry if it seems like I'm going on here, I'm just trying to gain a clearer understanding.
Basically Eric, if you were in my situation, which route would you take? I'm kind of leaning to buying one for a couple of grand private sale, at least its clear cut that way.
That article says many times that a lease purchase does not qualify, yet the example they give does? Nothing appears to be different in my eyes, unless I am missing something?
I may have read this wrong, but is it also trying to say that with a finance lease the lessee is treated as the owner for the duration of the contract?
Sorry if it seems like I'm going on here, I'm just trying to gain a clearer understanding.
Basically Eric, if you were in my situation, which route would you take? I'm kind of leaning to buying one for a couple of grand private sale, at least its clear cut that way.
So if there is no option to buy the van in the contract at the end of the finance lease, this can be seen as an operational lease?
The same would apply to contract hire then?
I sorted myself out an accountant earlier and he basically said the same thing, no option to purchase = effectively renting = claim 100% of the payments.
The same would apply to contract hire then?
I sorted myself out an accountant earlier and he basically said the same thing, no option to purchase = effectively renting = claim 100% of the payments.
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