Company Van, Personal Finance

[vhjay]

Hi All,

I've recently been looking at purchasing a van on finance for our AV/media business. I visited my local dealer to discuss a finance application and they advised that because the business is around 18 months old, it'd be more straightforward to apply for personal finance, because for a business less than 2yrs old they'd need full financial records for the business, for myself, and bank statement copies etc.

My question is, if I were to buy the van using personal finance, my first thought would be to simply boost my salary to cover the cost - however, is there a more tax efficient way of doing this? I'm paid a salary via a PAYE system so whatever boost I needed to cover the cost of the van, it'd end up costing more due to tax/NI.

Any thoughts would be really appreciated, many thanks!

 

[john1989]

You can buy the van personally, but you will not be able to claim Capital Allowances. A business cannot claim CA on an asset it doesn't own.

You can claim business mileage from your company for use of the van.

If the company then buys the van, the advice in the above two paragraphs would obviously change.

Other options include leasing the van personally to the company. You would then have to include your leasing income on your self assessment but you could then claim capital allowances personally.

If you buy personally, you won't have the protection of your company should the business not work out. I presume this is not an issue for you?

There's also possibly the issue of VAT to think about too.

From your post, it already sounds as though you are paying more tax than you may be legally required to. Do you not have an accountant to help you with these matters?

 

[Ben5678]

If you buy the van personally you could draw out additional dividends to cover it, this would however depends upon your current salary. Based upon a salary of £10,600 you could draw out up to £28,500 of dividends without incurring any more tax.