Sole Trader, Non Vat Registered, Vehicle purchase

[KPSS]

Hello, my first post, I found this place via google and a similar question was asked but that was 2012 so?

I am a sole trader who has been trading 14 months. I'm not vat registered and earning around £28k at the moment. The business is going relatively well and Im busy to the point of turning down work. Last year when I set up, I purchased a £2000 van, which is fairly old and is on 160,000 miles. Over the course of the year Ive spent a few thousand on it.... I appreciate this wasn't a sound choice, but I didn't want to invest in anything major at the start when I didnt know how the business was going to take off.

I did my tax return last year myself, and it all went ok. I put the van purchase into the return in a separate column, which I cannot for the life of me remember what it was called..... maybe AIA?

14 months down the line, Im starting to consider a newer vehicle. My current van probably needs a lot more spending on it, so would most likely get scrapped.

The best case scenario for me would be an Estate I think, but I believe in order to claim back any purchase expenses back, it needs be a Commercial Vehicle such as a Van or a Dual Cab truck? Thats correct isn't it?

Id an estate isn't an option, Id like to spend around £16,000 including Vat on a Commercial Vehicle. More than likely it will be a VW Amarok or Toyota Hilux. I would use this purely for my business as I have access to another car of a weekend (named driver). The Pick Up would be my only vehicle, and as Ive always been into cars I don't mind paying the extra to have something I'd want. I'd be looking at putting a small deposit down (say £2k) and paying around £300 a month for the vehicle. I dont want to lease or rent so the full amount would be financed.

Obviously, I'm not there yet, Ive got a bit of debt on a loan and a credit card which will be cleared within 6 months which would cover the £300 a month.

My question is, can I put these costs through on my tax return in April? As I say it will be a commercial vehicle and is used 100% for business. I do around 13k miles a year for business. So for example, could I put the £2k Deposit and however months of £300 I pay during this tax year (lets say 3 for example, £900) in my 2018/19 Tax return? OR Do I put that I purchased an £18k Vehicle in one go? Even though its on finance?

On my last tax return, It worked out better for me to put actual costs down as opposed the 45p/25p a mile if thats relevant as id spent a lot getting the van road worthy... bloody injectors!!)

I appreciate I should probably speak to an accountant regarding such a large purchase, and probably will but Im just after a rough idea.

I Can provide more information if required?


Kind Regards I anticipate the responses!

[jerome.lane]

You will be able to claim capital allowances on the vehicle purchase price according to whether it is classified a a car or van.
If a van then the annual investment allowance should be available. If a car, then you have to check the rate according to the CO2.
You should also get relief for finance costs (the interest).
You should check whether a mileage claim is more tax efficient.
If you lease, different rules will apply.
Good luck!

[KPSS]

Hi, thanks for the reply

When you say:

'You should also get relief for finance costs (the interest).

Does that mean just the interest? Oe 10.9% of the £300 a month? so £39 a month? I cannot claim the full £300?

It would be a Commercial vehicle worth circa £18k inc vat? Would I be better off putting the £18k purchase through as AIA?

Mileage claim didn't look very beneficial to me? 45p a mile and I did just over 10k last year, I spent more than that on fuel and repairs alone?

IF I was to buy a newer Commercial vehicle, and Id hope to have less repairs, so maybe 45p for the first 10k and 25p for anything else would give me a chunk of expenses? But could I still put the finance payments through as Id imagine the 45p a mile includes this?

Thanks