Ollieollie Posted January 7, 2016 Report Share Posted January 7, 2016 Evening All, I am considering a new van for business use, what is the deal with claiming the purchase back?? have done my own returns up until tax year 13/14 when i started using an accountant as things were getting a bit to complicated for me, am using my accountant again this year so this will all be sorted for me come april but can any one explain the situation for me in the mean time? Would be around £20,000 and i'm not vat registered(sole trader). Cheers All Ollie Quote Link to comment Share on other sites More sharing options...
craftycarper Posted January 7, 2016 Report Share Posted January 7, 2016 Think you have to be earning over £70,000 vat registered, not sole trader, but someone will probably say different Quote Link to comment Share on other sites More sharing options...
sitsinhedges Posted January 7, 2016 Report Share Posted January 7, 2016 I bought a new van last year and am not vat reg'd. The whole cost of the van is put against your tax bill for that year so if you pay 20k for a van it will take that amount of your gross income that would have been taxable for that year. Quote Link to comment Share on other sites More sharing options...
Ollieollie Posted January 7, 2016 Author Report Share Posted January 7, 2016 Think you have to be earning over £70,000 vat registered, not sole trader, but someone will probably say different £20,000 for the van Quote Link to comment Share on other sites More sharing options...
JBS Posted January 7, 2016 Report Share Posted January 7, 2016 You don't have to earn over any amount to become vat reg but if you earn over the threshold in any 12 month period, not just tax year to tax year then you must register. Would be worth registering if your spending 20k on a van! Quote Link to comment Share on other sites More sharing options...
aga man Posted January 7, 2016 Report Share Posted January 7, 2016 I bought a new van last year and am not vat reg'd. The whole cost of the van is put against your tax bill for that year so if you pay 20k for a van it will take that amount of your gross income that would have been taxable for that year. This is the way i understand it too. I am in the same position [sole trader and not VAT registered]. You buy the van with money from the business bank or a loan on the business, the next end of year account the cost of the van including any VAT will go down as expenses and the value offset against the tax you pay for that year. Quote Link to comment Share on other sites More sharing options...
eddoakley Posted January 7, 2016 Report Share Posted January 7, 2016 Just put the cost of the van on your tax return along with your other expenses (materials, wages, fuel, insurances.......) you then won't pay tax on the cost of the van as you haven't made that amount of profit. However that is very much simplified and does not consider whether you pay for the van outright or if it's financed, it doesn't take into account whether the van is an asset and it's depreciation, if you are not vat registered then you don't need to consider the vat aspect of the price. Accounts should save you more than they cost! Edd Quote Link to comment Share on other sites More sharing options...
FalconFN Posted January 7, 2016 Report Share Posted January 7, 2016 I bought a new van last year and am not vat reg'd. The whole cost of the van is put against your tax bill for that year so if you pay 20k for a van it will take that amount of your gross income that would have been taxable for that year. I was led to believe it was not that simple. Get professional advice. Quote Link to comment Share on other sites More sharing options...
craftycarper Posted January 7, 2016 Report Share Posted January 7, 2016 All I know is you have to be vat registered if your VAT taxable turnover is more than £82,000 (the 'threshold') in a 12 month period. Quote Link to comment Share on other sites More sharing options...
Wilts#Dave Posted January 7, 2016 Report Share Posted January 7, 2016 Why's everyone talking about having to be VAT registered, is he not just asking about claiming tax relief on a van? It is fairly simple, assuming you or the business already has a vehicle you'll have to deduct the old vehicles value from cost of the new one, then you can use that amount to offset against your taxable earnings as an expense. Quote Link to comment Share on other sites More sharing options...
ColinF Posted January 7, 2016 Report Share Posted January 7, 2016 I bought a new van last year and am not vat reg'd. The whole cost of the van is put against your tax bill for that year so if you pay 20k for a van it will take that amount of your gross income that would have been taxable for that year. This is the correct answer. The whole cost of the van, including the VAT as you are not VAT registered, can be offset against your business profits for the year. It's not claimed as an expense though, its a 100% capital allowance within in the Annual Investment Allowance. If you sell the van in the future, whatever you sell it for will be added to your income for that year as a balancing charge, increasing the amount of tax payable. Quote Link to comment Share on other sites More sharing options...
craftycarper Posted January 7, 2016 Report Share Posted January 7, 2016 This is the correct answer. The whole cost of the van, including the VAT as you are not VAT registered, can be offset against your business profits for the year. It's not claimed as an expense though, its a 100% capital allowance within in the Annual Investment Allowance. If you sell the van in the future, whatever you sell it for will be added to your income for that year as a balancing charge, increasing the amount of tax payable. That sounds more like it Quote Link to comment Share on other sites More sharing options...
MartynGT4 Posted January 7, 2016 Report Share Posted January 7, 2016 I was led to believe it was not that simple. Get professional advice. You may be able to claim capital allowance, see this for more info https://www.gov.uk/capital-allowances/overview Quote Link to comment Share on other sites More sharing options...
FalconFN Posted January 7, 2016 Report Share Posted January 7, 2016 (edited) I don't think you can claim under business expenses but capital gains experiences. I know vans and cars are classed differently but I have a car for work and can only claim back 8% of the cost in a year, plus expenses (Mileage works out better for me). I think you may be able to claim the full amount for a van but I imagine it will be spread over the life of the van and not just as one year's expense. This is why people pay accountants! Edt: Oops, ColinF got there first with a clearer answer..... Edited January 7, 2016 by FalconFN Quote Link to comment Share on other sites More sharing options...
jay404 Posted January 8, 2016 Report Share Posted January 8, 2016 Mine still put the vat against my tax as a loss because I paid out and received nothing for it seemed to work for me Quote Link to comment Share on other sites More sharing options...
sitsinhedges Posted January 8, 2016 Report Share Posted January 8, 2016 I was led to believe it was not that simple. Get professional advice. This is how my accountant did it. Vans have 100% tax relief in the first year now. Quote Link to comment Share on other sites More sharing options...
Rupert Posted January 8, 2016 Report Share Posted January 8, 2016 How are you funding it? Outright from own funds Bank loan Hire purchase from dealer Lease Finance lease. All have different tax allowable criteria. If you are not Vat registered then you Cannot reclaim the vat now, BUT! if you go vat reg in the next 3 years AND you have the invoice AND the item is still in your possession then you can retrospectively claim the vat (this include all other capital purchases) upon first registration. Quote Link to comment Share on other sites More sharing options...
figgy Posted January 8, 2016 Report Share Posted January 8, 2016 Tax office told me when I had my van. That if bought I could claim 40% of its value in depreciation each year against my tax bill. Or if Hp lease etc the monthly payments against tax. Hence the reason a lot of people change vehicles after a few year as they have next to nothing left to offset. My van was say ten k so could offset four k first year. Second year I could offset 40% of six k so by year three the offsetting amount was small. Not sure if things have changed in the last few years. Quote Link to comment Share on other sites More sharing options...
amateur Posted January 8, 2016 Report Share Posted January 8, 2016 (edited) Tax rules change almost every year, and some of the replies on here appear to be out of date. If you are investing £20k in a van, it would be worth spending a little for a Chartered Accountant's advice to get the best tax (and financing) treatment Edited January 8, 2016 by amateur Quote Link to comment Share on other sites More sharing options...
CharlieT Posted January 8, 2016 Report Share Posted January 8, 2016 Please heed ColinF's advice. Vans are classed as plant and machinery, therefore AIA applies and one can claim total cost back against tax in the year of purchase (including vat if you are not vat registered). Quote Link to comment Share on other sites More sharing options...
lord_seagrave Posted January 8, 2016 Report Share Posted January 8, 2016 I was led to believe it was not that simple. Get professional advice. This. There is a limit to how much you can claim for capital allowances as one lump like this (£15k, I believe). If your accountant isn't a tax adviser, get professional advice from a chartered tax adviser (or ensure that your accountant is getting the proper advice). LS Quote Link to comment Share on other sites More sharing options...
CharlieT Posted January 8, 2016 Report Share Posted January 8, 2016 Evening All, I am considering a new van for business use, what is the deal with claiming the purchase back?? have done my own returns up until tax year 13/14 when i started using an accountant as things were getting a bit to complicated for me, am using my accountant again this year so this will all be sorted for me come april but can any one explain the situation for me in the mean time? Would be around £20,000 and i'm not vat registered(sole trader). Cheers All Ollie This. There is a limit to how much you can claim for capital allowances as one lump like this (£15k, I believe). If your accountant isn't a tax adviser, get professional advice from a chartered tax adviser (or ensure that your accountant is getting the proper advice). LS LS The OP said that he does use an accountant and was just asking the forum a very simple question about the tax rules for van purchase. His question is not rocket science, but basic tax rules. Vans are treated the same as any other plant and machinery and, as has been said, qualify for AIA which is 100%. Simple answer to a simple question. If you dont know the answer don't guess it. Quote Link to comment Share on other sites More sharing options...
Ollieollie Posted January 8, 2016 Author Report Share Posted January 8, 2016 Hi All, As Charlie highlights i do use an accountant, i was just wondering while i wait for April to arrive. Cheers for all your replies! Ollie Quote Link to comment Share on other sites More sharing options...
Rupert Posted January 8, 2016 Report Share Posted January 8, 2016 LS The OP said that he does use an accountant and was just asking the forum a very simple question about the tax rules for van purchase. His question is not rocket science, but basic tax rules. Vans are treated the same as any other plant and machinery and, as has been said, qualify for AIA which is 100%. Simple answer to a simple question. If you dont know the answer don't guess it. And if the van is on Finance Lease then? Quote Link to comment Share on other sites More sharing options...
kent Posted January 9, 2016 Report Share Posted January 9, 2016 Ok, I married the accountant. Tax rules change you need to be up to date and know the most effective way for your business to pay. If you can buy a 20k van from business profit outright then I think you should certainly vat register bare in mind its claiming vat back on all your work purchases and if a fair proportion of your clients are also vat registered it makes no matter to them in fact many prefer you to be. As from your vat registered competitors and being cheaper than them consider they are all getting vat back on purchases like vans Your not properly supported if you have to wait till April or post on PW your likely talking book keeper not accountant and one who is used to your type of business at that, it would terrify me to be that way and I have been self employed for above 25 years Quote Link to comment Share on other sites More sharing options...
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