You can claim capital allowances on cars you buy and use in the business.
Where the car is a commercial vehicle, such as a van, you can deduct the full value from profits before tax.
As vans (or commercial vehicles built for transporting goods) do not count as cars (people carriers), a business can claim the annual investment allowance.
As an example, if you buy a commercial vehicle for £50,000 (cash or finance), the full value of £50,000 can be deducted from profits before tax. You may also re-claim 100% of the VAT paid on purchase where your business is VAT registered.
Where the vehicle is purchased on finance, the interest payments are an allowable company expense.
If purchased as a contract hire, the monthly rental cost are allowable company expense. Your company will not be eligible to claim capital allowances on the purchase.
Commercial vehicles are owned by the business and as such the maintenance and running costs are borne by the business.
It is recommended that private usage is extremely limited as heavy and significant private use may trigger benefit in kind taxes.
If you would like to discuss issues arising from this article or to find out more on the applicable tax exemptions, please contact us via hello@thetacuk.com