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I thought "tax wasn’t supposed to be taxing"
Hi folks
Have spent the last few days with our tax return and my head is spinning. A point of clarification would be great if anyone can help out.
I am aware that First Year Allowances of 40-50% (depending on size of company and tax year applicable) can be offset against our taxable income. We bought a van on hire purchase which we paid an initial deposit on and now, monthly payments which will continue until May this year. Do we claim 50% of our expenditure incurred in that financial year or is there another way?Thanks
Dawn
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9 Replies
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Thats where a really good accountant comes in. Ask anyone in your area, thats the best way of getting a good one. Where in the country are you? Ask on here if anyone knows a good one.
I know that my accountant saved me loads on my tax, and does an A1 job on the Company one. I had never heard of him, until someone said try these
Vince
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Hire purchase – the van is yours, the fact that you owe money on it is immaterial, and you can claim the allowance on the full purchase price.
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John
I was hoping that you would be around tonight!!!
The price of the van was £3500. Does this mean that I can claim FYA of 50% of the £3500 and then £437.50 in year 2?
Dawn
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Assuming that you have got the FYA rate right – I don’t know it……
1st year. 50% first year allowance of £1750
2nd year. Revert to the standard 25% allowance on the new written down value of £1750 = £437.50.You really need words with an accountant though because they have to do things with capital allowances that I’ve never taken the trouble to understand properly.
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Thanks John
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Funny this Tax lark and the way you get stung!!
iv been leasing vehicles for years and because the vehicles were leased i could claim 100% of the lease payments which has been nice.
2 years ago i decided to BUY on finance but this worked out nearly 50% cheaper than to lease 😛 AHA great. Problem. Tax goes in and they say OHHHH you bought it YES, rrrrrrr you CANNOT claim 100% of the payments now.WHATTTT i said, anyways they reakon it is now classed as CAPITAL or some guff now so all i can claim is the interest on the payments for the finance and yearly depreatiation. i may of saved on monthly payments but lost out bigtime on TAX. -
You shouldn’t have lost out on tax Alan. To take a simple example….
Let’s say that the van costs £10,000.
With a four year lease – in year one you will pay £2,500 and claim all that against tax.
By buying the van – year one again – you will claim back 25% capital allowance on the full £10,000 cost. That’s £2,500 again.
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You will find that there is very little difference tax wise twixt leasing and buying on hp or lease purchase, however you do it, the tax man will have his share. the total cost of running a van, tax wise after say 3 years will be be about the same. dont forget to take into account the residual value of the van, with leasing it will be zero
peter
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I know at the end of the hp term the vehicle is mine to sell keep whatever i want minus the vat n tax etc pfft it just miffed me that i was paying £340 a month to lease and i claimed all that back against tax :lol1: i bought on hp and now its classed as capital gains so i can only claim the interest for the monthly payments of £166 and the yearly depreiation, if i had know this b4 i would have keep leaseing, i do find i am better off Tax wise leasing though.
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