Are you at the stage where you need a van or a pick-up? Firstly you need to assess whether you are buying the vehicle in your personal capacity or through your business – or limited company.
You need to completely understand the options for either case, in order to make an informed decision based on tax relief and liabilities. Buying a van or pick-up truck in your personal capacity. When you buy either vehicle personally, you need to understand that the cost price, or financing cost, is not tax deductible.
Also, you will be unable to claim tax relief on any of the costs thereof, including insurance, maintenance, fuel and road tax. However, you are able to claim a tax-free allowance from your limited company for business mileage. You would need to visit the government website for tax relief calculations.
Buying a van or pick-up through your limited company
For tax purposes, vans are classified as machinery or plant. They qualify for 100% allowances under the Annual Investment Allowance rule, meaning you are entitled to a 100% deduction of the cost which will come off the company’s taxable profits.
An infrequent trip to the doctor would apply, whereas fetching the children from school on a daily basis or a weekly grocery shop would not. There are quite substantial tax benefits in using the company van compared to the high CO2 emissions from a private car, providing that the mileage is limited.
You can reclaim all the VAT on fuel providing that the vehicle is used only for business. There are 3 ways of handling VAT if you are using the vehicle for both business and private. Firstly, all the VAT can be reclaimed and you pay the correct fuel-scale charge for your vehicle; only claim the VAT back on fuel you use for business trips meaning you would have to keep an accurate mileage book; decide not to reclaim VAT, in the instance when the business mileage is at a rate that the fuel-scale charge could be higher than the VAT reclaimable.
Bear it in mind that if you choose not to claim VAT back on fuel for one vehicle then your business cannot reclaim VAT on fuel for any of your vehicles. Any tax allowances detailed are subject to the status of your business. You should check with your Accountant or Tax Adviser that you are eligible to take advantage of any of these allowances. Personal use of these vehicles may result in a tax assessment so a consultation with your Tax Adviser or Accountant is advised. Tax information is provided as a guide only, and can vary according to circumstances. It is recommended that you contact your local Inland Revenue office for more detailed information.
VAT is reclaimable if you are buying a new van for your company, which immediately saves you 20%. For small businesses that aren’t registered for VAT, purchasing a No VAT used van again translates to a 20% saving.
Buying a pick-up through your business
Many people are under the impression that a pickup is expensive to own, and that you need to win the lottery with a Betfred promo code in order to stack the money. They are perceived as vehicles of farmers or the wealthy. But they are far more affordable than you think. Firstly, as with vans, purchasing a pickup truck for your business, and for business use only, is VAT free, meaning that you can claim the VAT. All the other VAT implications for vans detailed above, apply.
However, it must be remembered that buying a single-cab pickup truck limits usage. It would be highly impractical for family use, but absolutely brilliant for doing the monthly grocery trip. This vehicle is a workhorse, and is really handy for removing garden rubble and refuse, but you may be inveigled into helping friends move house or other favours. Should you purchase a double-cab then the loading capacity is reduced, but you can transport twice the number of passengers.
Pick-up trucks are classed as Light Delivery Vehicles, which means a significant lump sum would have to be paid annually in vehicle excise duty. However, this cost is comparable to a 2-litre hatchback so the difference is negligible. Also remember that fuel efficiency is around 40 miles per gallon for 2-litre trucks on motorways, but not so good in town or city traffic.
Once you have weighed up the pros and cons and assessed the needs of your business, the fun begins. Go out and test-drive every brand of vehicle within your price range (for instance, you can try out the new Toyota Proace), and check and recheck the options that the manufacturers of each van or truck claims. From building contractors to lighting specialists, there is a delivery vehicle that will suit your needs.
