Hi all,
Myco is thinking of buying a company van, which is treated as plant & machinery, the tax situation (BIK of £3500 per annum, including comany fuel for all private milage) looks attractive.
I've done the figures & run them by my accountant who seems content with the concept but am confused as to how the capital allowance is factored in. It seems that in the 1st year I could apply a 25% capital allowance on the assett (or even 40% as a first year allowance), as an example on a £20K van this could equate to £5,000 which we can show as an expense in our P+L account, thus reducing Corporation Tax liability by £1,000. The ineterest portion of the lease payments (if its a lease purchase) as well as insurance, maintenance etc. can also be offset against CT.
The bits I'm unclear on - as the company has will not actually spend the £5,000 does it remain in the company as if it had been taxed, i.e. along with the rest of the Net Profit? After a few years (when its paid off) can the company sell the van on at its net value (i.e. purchase price less capital allowances)?
As I'm past 2 years on the same contract I can't claim milage to work & paying out a large amount on fuel, depreciation on my car etc, so this looks like it could be a go-er.
Is anyone else doing this?
Regards,
Mike
Myco is thinking of buying a company van, which is treated as plant & machinery, the tax situation (BIK of £3500 per annum, including comany fuel for all private milage) looks attractive.
I've done the figures & run them by my accountant who seems content with the concept but am confused as to how the capital allowance is factored in. It seems that in the 1st year I could apply a 25% capital allowance on the assett (or even 40% as a first year allowance), as an example on a £20K van this could equate to £5,000 which we can show as an expense in our P+L account, thus reducing Corporation Tax liability by £1,000. The ineterest portion of the lease payments (if its a lease purchase) as well as insurance, maintenance etc. can also be offset against CT.
The bits I'm unclear on - as the company has will not actually spend the £5,000 does it remain in the company as if it had been taxed, i.e. along with the rest of the Net Profit? After a few years (when its paid off) can the company sell the van on at its net value (i.e. purchase price less capital allowances)?
As I'm past 2 years on the same contract I can't claim milage to work & paying out a large amount on fuel, depreciation on my car etc, so this looks like it could be a go-er.
Is anyone else doing this?
Regards,
Mike
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