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| Muddybigdog Member Since: 11 Apr 2014 Location: Suffolk Posts: 1038   
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NOTE: I AM NOT AN ACCOUNTANT
I ran your scenarios through Claude (AI), below is what it churned out; it is worth fact-checking with someone in the know, if correct. To help you understand the tax-efficient options for acquiring a van for your new LTD company. Let me search for the most current information on UK business vehicle purchases to make sure my advice is up-to-date. Based on the information I've gathered, I can outline the most tax-efficient ways for your new LTD company to purchase a van for business use. Let me break down your options: ## Option 1: Company Purchase with Annual Investment Allowance (AIA) If your LTD company purchases the van outright, you can claim the full cost against profits through the Annual Investment Allowance (AIA), which allows for full first-year deductions. This is one of the most tax-efficient methods. The process would work like this: 1. The company pays for the van (£35k + VAT) 2. Since the van will be used exclusively for business, your company can reclaim all the VAT on the purchase 3. The company can claim 100% of the cost against profits through the Annual Investment Allowance, reducing your Corporation Tax bill ## Option 2: Director's Loan to Company If you have funds personally but want the company to own the van, you could: 1. Loan the £35k + VAT to your company (as a director's loan) 2. The company purchases the van 3. This money would be recorded in your Director's Loan Account (DLA) as a credit (company owes you) 4. You can withdraw this money tax-free from the company in the future when the company has sufficient funds 5. The company still gets all the tax benefits mentioned in Option 1 When using a director's loan, you must keep accurate records of all transactions in a director's loan account, which should be included in your company's balance sheet as part of the annual accounts. ## Option 3: Lease the Van With a lease agreement, your company would make fixed monthly payments for the use of the van over a defined period. Benefits include: 1. The company can deduct the full leasing costs against profits, reducing Corporation Tax 2. For a leased van used purely for business, the company can reclaim 50% of the VAT on lease payments 3. No large upfront capital expenditure required ## Key Tax Considerations 1. **VAT Recovery**: You can reclaim all VAT on a new company van if it's used exclusively for business purposes. This is a significant advantage. 2. **Private Use**: The van must be used exclusively for business purposes with no private use to claim 100% VAT. If there is any private use, there would be a Benefit in Kind (BIK) charge of £715 for 2025. 3. **Corporation Tax**: The full VAT-exclusive cost of the van can be offset against the company's profits for the year through the Annual Investment Allowance. This would significantly reduce your Corporation Tax liability. ## Most Tax-Efficient Option Based on your situation as a sole director with a new LTD company and purely business use of the van, the most tax-efficient approach would be **Option 1 or 2**: - **If company has the funds**: Purchase outright through the company - **If you have personal funds**: Loan the money to the company and have the company purchase it Both options allow the company to: 1. Reclaim the full VAT (as it's purely for business use) 2. Claim 100% of the cost against profits in year one via AIA 3. Avoid any BIK charges (as long as it's strictly for business use only) If you opt for the director's loan route, you can withdraw the money tax-free when the company has sufficient funds to repay you. Jumped ship to reliability - Mitsubishi L200 Puma 90 XS - Sold D3 - 2.7 S x2 (both Sold) Freelander 2 HSE - Sold Freelander 1 - Sold Disco 2 - Sold |
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17th May 2025 2:55pm |
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| bear100 Member Since: 22 Mar 2010 Location: South Wales Posts: 1993  
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Thanks for the help,
It’s pretty much what I’ve came up, good idea to us AI!! 2023 Defender L663 V8 2016 Range Rover Autobiography 4.4 TDV8 (gone) 2010 110 XS Utility 2.4TDCI 2010 Range Rover Sport TDV8 (gone) 2007 Discovery HSE TDV6 (gone) 1993 110 csw 200 tdi (gone) 1994 90 HT 300 tdi (gone) 1994 discovery 300tdi (gone) 90 hybrid 3.5 v8 (gone) Range rover bobtail 3.5 v8 (gone) |
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18th May 2025 12:24pm |
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| AMBxx Member Since: 24 Jul 2016 Location: York Posts: 1058 
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As you're working as a limited company, you almost certainly have an accountant. Ask them, it's what you pay them for.
If you don't have an accountant, get one. Unless you're a qualified accountant (van?), then you'll need one to do your limited company returns. Much cheaper in the long run to get it right at the start. |
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18th May 2025 4:02pm |
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