25 February 2024

Buying a van for your small business

By ruiiid5

If you are a builder or courier who depends on a vehicle to make a living, purchasing a van via your company is a tax-efficient option. Before you begin shopping, there are a few things to keep in mind.

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What are the tax advantages?

You can deduct 100% of your van purchase cost from your capital allowance. Vans are considered plants and machinery when it comes to tax.

Essentially, you can deduct the full price of the van from your company profits – before calculating corporation tax. You should be aware that, if you decide to sell your van, you will need to pay taxes on it.

Be careful to make sure the vehicle qualifies for a van and not a car. You can consult a list that is provided by the government before buying.

If your business is VAT registered, you can claim back the entire VAT on the van cost.

You can also claim for other expenses, such as:

  • Vehicle Insurance
  • Fuel
  • Repairs and services
  • Parking
  • Breakdown cover
  • Vehicle license fees

You should consult your accountant about the tax situation. You can ask them if you should purchase your van via your company, and how much tax relief you are entitled to.

All paperwork and payments must be made through your business account. For a range of Used Vans for sale Gloucester, visit https://cotswoldvancentre.co.uk/buy/used-vans-for-sale/gloucester/

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Personal Use

The tax situation becomes complicated if you use your van for both personal and work purposes. This will be a benefit-in-kind and therefore affect your personal tax situation. When you purchase the vehicle, you can only claim a small portion of the VAT.

The number of personal miles you drive will determine whether you should buy fuel, expense it, or have the company buy it and declare it as an in-kind benefit.

Check with your accountant if buying the van through your company is the best option.