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Where Taxpayers and Advisers Meet

Buying new van

clockcrazy01
Posts:23
Joined:Tue Jul 17, 2012 10:17 am
Buying new van

Postby clockcrazy01 » Tue Apr 11, 2017 2:27 pm

Hi folks.
I am thinking of buying a new van. If the van for example costs £12000 how much will come off my tax? I know it won't be the full amount but is there a percentage?
I've waited for new tax year to buy so may decide to buy any time but just want to know more about capital allowance?
Thank you as always.

clockcrazy01
Posts:23
Joined:Tue Jul 17, 2012 10:17 am

Re: Buying new van

Postby clockcrazy01 » Thu Apr 13, 2017 11:46 am

Any advice would be much appreciated... it may not be a new vehicle but just wondered how much you actually get off your tax when buying a vehicle used for a business e.g., price at around £12000? Many thank :)

clockcrazy01
Posts:23
Joined:Tue Jul 17, 2012 10:17 am

Re: Buying new van

Postby clockcrazy01 » Thu Apr 13, 2017 5:37 pm

Any advice would be much appreciated... it may not be a new vehicle but just wondered how much you actually get off your tax when buying a vehicle used for a business e.g., price at around £12000? Many thanksgivings :)

clockcrazy01
Posts:23
Joined:Tue Jul 17, 2012 10:17 am

Re: Buying new van

Postby clockcrazy01 » Thu Apr 13, 2017 5:45 pm

Sorry for errors and submitting twice, unsure what happened, could be fact that I am using my iphone! Cheers :)

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Buying new van

Postby bd6759 » Thu Apr 13, 2017 6:01 pm

Depends what accunting conventions you are using.

If you have elected to use the cash basis, the cost of the van is an expense.

If you are using conventional accounting it is not an expense, but you can claim capital allowances. The AIA rate is 100% of the expense.

In both cases the amount you can claim is reduce proportionally by the anticipated non-business use.

clockcrazy01
Posts:23
Joined:Tue Jul 17, 2012 10:17 am

Re: Buying new van

Postby clockcrazy01 » Fri Apr 14, 2017 6:44 pm

Thank you for your reply. I presume I am using conventional accounting as i do a self assessment tax return although I may be completely wrong?! Can you confirm the difference please? Thanks in advance fir your time and help :)

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Buying new van

Postby bd6759 » Sat Apr 15, 2017 9:16 am

Cash basis means you acount for what you receive and spend at the time it happens. Conventional accounting uses the matching principle where expenses are matched to income.

For example, in a year you buy £1000 of goods for resale. You sell half of them in one year for £1500 and the other half the following year for another £1500.
Using the cash basis your profit in year 1 is £1500 - £1000 = £500. In year 2 it is £1500 - 0 = £1500.
Using conventional accounting your profit in year 1 is £1500 - £500 = £1000 and in year 2 it is it £1500 - £500 = £1000.

The most prominent difference is that with the cash basis you can deduct expenditure on capital items such as vans and equipment. With conventional you would spread the cost over their useful life, For tax purposes you would claim capital allowances.

clockcrazy01
Posts:23
Joined:Tue Jul 17, 2012 10:17 am

Re: Buying new van

Postby clockcrazy01 » Sun Apr 16, 2017 10:56 am

Hi thanks for your reply... I presume I am conventional then as I do self assessment tax returns? thanks again, I do appreciate it.

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Buying new van

Postby bd6759 » Sun Apr 16, 2017 1:01 pm

Hi thanks for your reply... I presume I am conventional then as I do self assessment tax returns? thanks again, I do appreciate it.
Whichever basis you use, you need to complete a return.


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