VAT, etc on company Van (Jeep)

S

sue97

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I am running a business for the past three years as a sole trader. Am changing the business to a limited company and DH is going to be the other director.

I am also registering for VAT. We have a people carrier for me and 3 kids and an 05 car in the driveway which he only uses the odd time.

I am trying to figure out if it would be worth getting a company 2 door jeep (that comes under Van legislation with regard to BIK).

Does it work like this.

Buy Jeep for 20k - trade in car for 10K - balance paid 10K
Get 4,200 back in VAT so real cost of upgrade 5,800
Tax, insurance, go down as business expenses.
Diesel for business go down as expense as well.

I did review other posts but could not find a clear example so apologies if repeating previous thread :)
 
sue97 said:
...
Buy Jeep for 20k - trade in car for 10K - balance paid 10K
Get 4,200 back in VAT so real cost of upgrade 5,800
Tax, insurance, go down as business expenses.
Diesel for business go down as expense as well...
Click to expand...
I'm not sure I understand your sums fully, but subject to correction, how about this:

DH sells car for 10k and gives business 10k loan or registers debenture
Business buys van for 20k
Get 3,471 back in VAT, so real cost of upgrade 16,529
Tax, insurance, maintenance go down as business expenses
Insurance will have zero NCB unless you have had commercial insurance previously
Diesel for business goes down as business expense as well...
VAT on diesel and maintenance reclaimed by business
Van as depreciating capital asset gets written down year on year before business tax calculation
Loan, subject to cash-flows, gets repaid before business tax calculation
BIK paid by directors for private use of van, if such situation arises
 
sue97 said:
that was exactly what I was trying to understand and more.

Thanks

Sue
Click to expand...

Just don't take my post as gospel please, I was just trying to give my understanding of the mechanics of the scenario - I could be miles out.
 
No worries, would run it by accountant before buying but it gives me an idea of the costs.

Thanks
 
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