Company van

[peterdallan]

Hi,

I’m due to complete on a small business purchase very soon and have a question about buying a van, Until now I’ve always been employed and paid PAYE.

The company will be a partnership, and is currently below the VAT threshold.

I will need to buy a van for pickups and deliveries but won’t be used for the business 100% of the time. As my current personal car lease is coming to an end, I will buy a new or newish small van that I can use as my personal transport as well. I’m guessing the van will be used 50/50 business/personal for now.

Is there an optimum way for me to buy the van? Personally or through the company? Or maybe someone can point me to a good guide?

As always, many thanks for taking your time to help me.

Regards

Peter

 

[Scalloway]

There are two ways to deal with a vehicle for sole traders and partnerships. Either the vehicle goes through the business accounts and all costs are charged to the business. A deduction is made for personal use in the business tax return. The alternative is for the business to claim 45p per business mile on the tax return.

 

[peterdallan]

Ok thank you. I’m not up to speed yet on partnerships bs Limited companies, but if I bought it through the the partnership could I offset the cost of purchase against any profits? If so would that not make this the better option?

Thanks

Peter

 

[Scalloway]

You have two options that will offset the costs against partnership profits

1. All costs are charged to the business, deducting personal use in the business tax return. If you put the whole cost of the van in year one you will get a big deduction in year 1 and just running costs thereafter. Or you can deduct 18% of the reducing value plus running costs each year.
   
2. You charge the business 45p per business mile for as long as you use the van.

You need to do a sum to get an estimate of which will produce the best result

 

[peterdallan]

ok thank you

Peter