Business Tax Relief For Vans

When company vans are bought (using finance or from cash reserves) or leased the business can claim a deduction against taxable profits each year for part of the purchase cost or lease payments.

The rules vary according to the finance method used, with the effect that choosing whether to lease or buy can impact on the tax liabilities of a business each year.

In turn, the timing of the tax relief can impact on the cash-flow of a business as tax relief tends to be deferred on vans that are bought when comparised to the timing of tax relief for vans that are leased.

Follow these links for more about busines tax relief for vans bought or leased.

Self-employed

For the self-employed where the vehicle is used partly for non-business purposes, tax relief is apportioned according to the ratio of annual business miles to total annual miles.

Value Added Tax (VAT)

The VAT rules on company vans are relatively straightforward.

Basically, if you are registered for VAT;

•	VAT incurred on the purchase price of company vans that are purchased can be recovered under the normal rules applicable to your business;
•	when a company van is sold VAT must be charged on the sale price just as with ordinary output VAT on sales by your business;
•	for company vans that are leased, VAT on the monthly lease payments can be recovered under the normal rules applicable to your business, including VATpaid on final balloon payments in balloon leasing;
•	if you receive a rebate of rentals at the end of a van lease you must account for the VAT returned to you with the rental rebate as if it were output VAT charged by your business.

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