Thinking of leasing a van? what can I claim?

[eclipse]

Hi everyone,

I run a mobile car repair business and have been using my car for the last 2 years using the business mileage method 40p for the first 10K then 20p (now 45p and 25p) I am also under the VAT threshold so am not registered for VAT which is good for my customers as they are all private and this saves them money and makes me more competitive. I don't have an accountant as it is relatively straightforward to do my own accounts.

I have now decided I would be better off getting a van, I am thinking of leasing and wanted to know if I could claim this monthly cost as a business expense? or is it not allowed as I am claiming business mileage as opposed to the actual cost method (insurance, Tax, MOT running costs etc)?

If I didn't lease and got a bank loan to buy a van could I claim anything back then either? the interest for example whilst still using the business mileage option?

I really don't want to be VAT registered but it seems like you lose out when purchasing a van from a dealer due to the large amount of VAT to be paid on this type of purchase unless you buy secondhand.

Any help or guidance would be much appreciated

Thanks

J

 

[roydmoorian]

I am afraid that "Can't have it both ways comes to mind"

Is there a flat rate VAT scheme for your occupation ?

 

[Robert Pearce]

This answer assumes that you're a sole trader.

Although you have to be consistent from year to year when applying either the 'actual cost' or business mileage methods, you are allowed to change the method when you replace one vehicle with another. If you lease or buy a van then, as you're under the VAT threshold, you'll have the standard choice between:

(a) just claiming business mileage for the van (plus interest on any loan taken out to buy the van); or

(b) claiming a proportion of the running costs of the van (subject to any private use adjustment). You'll also be able to get tax relief on the lease payments or, if you buy the van, you'll be able to claim capital allowances on the cost of the van (again subject to any private use adjustment).

See page three of helpsheet 222 for more details.

 

[eclipse]

Yes I am a Sole Trader.

Thank you for the replies, so I can at least claim for the interest on a loan to buy a van whilst claiming business mileage, but if I decide to lease I cannot claim anything but the business mileage. ( I hope I have got that right)

Does anyone know which option would be most beneficial to me from a tax saving point of view? Buying or Leasing? I know this depends on quite a few factors:

1) I only do about 10K miles a year
2) The vehicle 95% of the time would be for business use
3) I'm not VAT registered as i'm not earning over the threshold
4) I'm a sole trader

Maybe someone else has experienced what was most beneficial to them

Many thanks

J

 

[bargainmania]

Hi J

I cant answer your questions but atm i am working on a website that deals with
all sort of financing and leasing of vehicles, if it's of any use to you i can have him
contact you on Monday and i am sure he will be able to explain all the various in's and out's
to you. If you want you can pm me your contact details.


Alistair

 

[Robert Pearce]

... but if I decide to lease I cannot claim anything but the business mileage. ( I hope I have got that right)

No, that's not right. As I said in my earlier post, you have the choice between the business mileage and 'actual costs' method.