Sole Trader purchasing a 4x4

[samthornton1990]

Now then,

 

Just doing some reading on what I can claim off my tax bill in regards to a 4x4, it's battering my head

 

From what I've read, anything that's over 130 g/km on emissions is 8%,

 

so am I right in thinking that if I spend £10000 on a car I can only claim £800 off my tax bill?

 

Would appreciate input!

 

Cheers

 

Sam

[gensetsteve]

Now then,

 

Just doing some reading on what I can claim off my tax bill in regards to a 4x4, it's battering my head

 

From what I've read, anything that's over 130 g/km on emissions is 8%,

 

so am I right in thinking that if I spend £10000 on a car I can only claim £800 off my tax bill?

 

Would appreciate input!

 

Cheers

 

Sam

 

I have a feeling it could be less than that. You can only depreciate £800 so at 25% tax that's £200. If you buy a double cab with a payload of at least 1000 kg you can depreciate 100% or knock £2500 of your bill £4000 if you earn in the next level.

[samthornton1990]

Think I will have to sort an accountant out for the next tax year, battering my head!

[Billy]

Sort something classed as commercial I.e a double cab pick up with a ton payload and it's fully deductible. If you want something nicer, say a RRS then all the other rules come into play and you would claim very little back if anything.

[hamdogg]

Sort something classed as commercial I.e a double cab pick up with a ton payload and it's fully deductible. If you want something nicer, say a RRS then all the other rules come into play and you would claim very little back if anything.

 

 

So what's classed as not commercial? 4x4 wise

[Rich Rule]

My account rant says commercial can carry a ton payload. Ergo, I would have thought a 4x4 that doesn't carry a ton isnt commercial.

[Billy]

So what's classed as not commercial? 4x4 wise

 

 

As rich said above its mostly based around payload. Or usually clearly defined by the manufacturer making a special commercial model, like the discovery commercial, the rest of the range is not commercial.

[gensetsteve]

Sort something classed as commercial I.e a double cab pick up with a ton payload and it's fully deductible. If you want something nicer, say a RRS then all the other rules come into play and you would claim very little back if anything.

 

In my experience the repairs on a Range Rover will reduce your tax bill nicely but then you may as well open a window and chuck it away.

[Kev Stephenson]

This from HMRC. They are also picky on using the high spec pickups like the top of the range Isuzu d-max or special edition Navaras as this is seen more as a perk than a necessity. i.e. the top of the range model doesn't do any more for your business than the basic one so why should you have it. There is a specific list of vehicles which they will accept but some accountants just put anything through.

 

Car or Van?

 

There are several tax areas which rely on being able to determine whether a particular vehicle is classified as a car or a van. All have different definitions.

 

1. Benefits in kind, where car and fuel benefits are linked to a scale of CO2 emissions, whereas vans are on flat rates.

 

2. Capital allowances, where vans qualify for annual investment allowance, whereas cars enter the main or special pools and qualify for writing down allowance only.

 

3. VAT where input tax can be claimed on vans but not on cars.

 

Car benefit definitions

 

Every mechanically propelled vehicle is a car, unless it is:

 

* a goods vehicle

 

* a motor cycle (essentially a vehicle with less than four wheels)

 

* an invalid carriage (normally obvious)

 

* a vehicle of a type not commonly used as a private vehicle and unsuitable to be so used (not many of these about)

 

A goods vehicle is defined as a vehicle of a construction primarily suited for the conveyance of goods or burden of any description (excludes people). The test is of construction, not use. It is only if the primary purpose for which the vehicle is constructed is the carriage of goods that it will escape from being a car.

 

For benefit tax/NIC and VAT purposes, one must look at the construction at the particular time in question (time of transaction or in relevant tax year). VED is based on type approval at the time the vehicle is first registered.

 

A vehicle whose design weight exceeds 3,500kg is not a van, but a heavy goods vehicle.

 

Double cab pick-ups

 

On the surface many double cab pick-ups appear to be equally suited to convey passengers or goods. However, when all factors relating to their construction are taken into account, a number of vehicles within this category do have a predominant purpose of carrying goods or burden. Each case will depend on the facts and exact specification.

 

As a general rule, HMRC accepts that a double cab pick-up with a payload of 1 tonne (1,000kg) or over is a van for benefit purposes. The 1 tonne rule applies only to double cab pick-ups, not to any other vehicle.

 

Capital allowances definition

 

This is almost identical to the benefits definition. Hire cars, taxis and driving school instructor cars are specifically included in the definition of cars.

 

VAT input tax recovery

 

VAT rules say that a car is any motor vehicle of a kind normally used on public roads. It must have three or more wheels and meet one of the following conditions:

 

* It must be constructed - or adapted - mainly for carrying passengers.

 

* It must have roofed accommodation behind the driver's seat. This must either be fitted with side windows already or be constructed - or adapted - so that side windows can be fitted.

 

In addition, the following are not cars for VAT purposes:

 

* vehicles capable of accommodating only one person or suitable for carrying twelve or more people including the driver

 

* caravans, ambulances and prison vans

 

* vehicles of three tonnes or more unladen weight

 

* special purpose vehicles, such as ice cream vans, mobile shops, hearses, bullion vans, and breakdown and recovery vehicles

 

* vehicles with a payload of one tonne or more

 

Problem car-derived vans

 

These vehicles, from the outside, still maintain the appearance of a car. However, from the interior the vehicles have the appearance and functionality of a van – the rear seats and seatbelts have been removed along with their mountings, the rear area of the shell is fitted with a new floor panel to create a payload area and the vehicle's 'side windows' to the rear of the driver's seat are made opaque. Such vehicles will be classified as vans, but all the criteria are very strictly applied.

 

Vans with rear seats

 

Some vehicles look like vans and don't have windows in the sides behind the driver. But they do have additional seats for carrying passengers behind the front row of seats (or they're designed so they can be fitted with them). They're sometimes known as combination vans or combi vans.

 

HMRC considers that this type of vehicle is a commercial vehicle for VAT purposes if it meets either of the following conditions:

 

* It has a payload of more than one tonne after the extra seats have been added.

 

* The dedicated load area (the load area that's completely unaffected by the extra seats) is larger than the passenger area. This means that the main use of the vehicle is for carrying goods rather than passengers.

 

If it meets either of these conditions then the vehicle is a commercial vehicle for VAT purposes and you can reclaim the input VAT if you follow the normal rules for reclaiming VAT.

 

HMRC has produced a list of car derived vans and vans with rear seats showing whether they're classed as a van (commercial vehicle) or a car for VAT purposes (attached)

 

Remember that vehicle specifications change so the list may not be up to date.

[Kev Stephenson]

I have got an HMRC list which shows the different car derived vans and whether they qualify as a van. If you post your email address I will send it on to you.