TOPIC: Purchasing a van - allowances etc.

Hi,

I am considering purchasing a new van as a sole trader.

What capital allowance is currently used for vans? Is there still a 40% write down in year 1 the 25% after that? If the van is used, rather than brand new, does this affect capital allowance situation?

I am also not VAT registered, but not sure if it is worth all the pithing about just to get the VAT back and all the other extra expenses and complexities that go along with VAT.

Anything else I should consider?

Ross.

Hi,

Allowances:
Vans are 'plant' and from April 2008 there is a 100% Annual investment Allowance (AIA) on plant up to £50k. So you should be able to claim the whole lot against the profits for the year, assuming you use it 100% for business use.

VAT (flat rate scheme):
If you register for VAT then some of your customers that are not registered will have to pay VAT on your bills which may make you less competitive. If you mostly supply big companies this will not be so much of an issue.
One option is to go on the flat rate VAT scheme to simplify your VAT accounting. With this you calculate your VAT payments as a percentage of your total VAT-inclusive turnover. So do not need to consider calculating the VAT element on all purchases. Although you can still claim VAT back for large capital goods purchases - Over approx 2k.

I am just using a VW Passat (big estate car) at the moment, which is very limiting with getting materials transported around, but just charge 40p per mile against the business, which is another way to claim the cost of transport.

If you do not register for VAT, it may be worth sorting something out before the VAT increase back up to 17.5%.