Buy a van now or wait for next year when I will be VAT registered?

Not sure if this makes any sense but I am thinking of buying a van (to replace the current one) and I'm wondering should I buy it now or wait till next year?
The reason I ask is because I am currently not VAT registered and next year I will be. I know I can claim the VAT back next year but if I buy this year then I will reduce my tax liability?

The van is about 5k. Any advice appreciated.

On a side note, when do I register for VAT for next year? I won't go over the threshold this year but from current forecasts I will go well over it next year. Thanks for your help.

Hello, my advice to you would be to ask Revenue they are very helpful

Who are you buying the van from? Are they VAT-registered because if they are not then there won't be any VAT to claim back anyway.

You will not reduce your tax (I presume you mean Income Tax) liability all that much. The cost of the new van won't be allowed as a tax-deductible expense in just one year. You claim 12.5%% of the cost of the van as a capital allowance every year for the next 8 years.

eg - cost of van = €4,800 so you can claim €600 as a Capital Allowance every year for 8 years
Assuming tax rate is say 50% then you save €300 per year over the 8 years
Therefore total tax relief = €2,400

You will actually save more tax by claiming the VAT back and get Capital Allowances on the net-of-vat cost of the van anyway

eg - cost of van = €4,800 (incl VAT of €888). Therefore net cost of van = €3,902 so you can claim €488 as a Capital Allowance every year for 8 years
Again assuming tax rate is say 50% then you save €244 per year over the 8 years
So total Income Tax relief = €1,952 but you also get back the VAT of €888 (€4,800 / 1.23 * 0.23) so you actually gain €2,840 in this example

As far as when you have to register, per Revenue website: "registration is obligatory where certain turnover thresholds are exceeded or are likely to be exceeded in any twelve-month period"

Basically what that means is that you are obliged to register for VAT when you know that you will go over the threshold in any rolling 12-month period, not just necessarily your accounting year or calender year.

Thanks for your help. More confused now than ever
Accountant time I think!!

It does seem confusing to begin with but, my husband is a self employed courier..thats why I said to go to your local revenue office, this time of year is good they are not as busy..

It's not really confusing at all. As DB74 pointed out it is more tax efficient to wait until you are VAT registered.

FYI you don't have to wait until you reach the threshold to register for VAT, you could do this at any time. It depends on your trade but if your customers are all VAT registered there is unlikely to be any downside to immediate registration.