Start up - Part time advice (Tax etc)

[RandomD]

Hi, I am looking for advice on starting up a motorhome hire business, it will be part time to begin with, certainly for the first year. I have done a fair bit of research, I think sole trader would be the best route but unsure, I am finding the Tax /Vat quite confusing, looking for advice on the following. I am currently employed and my earnings are into the 40% tax band.

How would the purchase of a vehicle ( Mostly financed) affect my income tax, would the purchase be offset against my income tax.
Im aware that on a sole trader, any profit would be 40% taxable due to my employed income, but what would the effect on combinable tax if no profit was made in the first year?

If i make payments for the vehicle from my own account on months where hires are short, how do i show this on tax returns?

Am i right in saying that VAT can be reclaimed on the repayment?

Hope some one can help with these points.

Thanks

 

[Scalloway]

How would the purchase of a vehicle ( Mostly financed) affect my income tax, would the purchase be offset against my income tax.
Im aware that on a sole trader, any profit would be 40% taxable due to my employed income, but what would the effect on combinable tax if no profit was made in the first year?

If you made a loss as a sole trader that can be set against your other taxable income

If i make payments for the vehicle from my own account on months where hires are short, how do i show this on tax returns?

You show the expenditure as you normally would. The technical term for what you are doing is capital introduced

Am i right in saying that VAT can be reclaimed on the repayment?

Thanks

Motorhomes are classed as private cars by HMRC, so only 50% of VAT on a lease would be recoverable. You would be best speaking to an accountant to ensure you were doing this in the most tax efficient way.

HMRC guidance on motorhomes is here

http://www.hmrc.gov.uk/manuals/eimanual/EIM23155.htm