i have started work as a self employed scaffolder,need transport what is the best option regarding tax?

Question

i am thinking of a nissan warrior type 4x4,but am i better off with a astra type van for tax releif.i would also appreciate any info as to mileage that can be backcharged against my tax.i am a complete novice

Answer 1

Tax relief and mileage relates more to those companies with a fleet of company cars

When you are self employed in your type of industry you need nothing more than a profit and loss account.

This means that you have a years total for sales/income

and deduct all work related expences from it

eg vehicle purchase, materials, telephone, stationary, motor expences (which is made up of petrol, tax, insurance over the year)

You will end up with sales less expenses = taxable net profit

Answer 2

ok, the purchase of a vehicle is classed as an asset, this means you cannot deduct the cost of the vehicle against your income through the profit and loss. what you have to do is claim whats called capital allowances. by doing this you claim a certain % of the tax value, say 25% each year. it works like this :

cost .10,000
less 25% 2,500
carry fwd 7,500

the £2500 reduces your profits

next year its

cost b/f 7,500
25% 1,875
cost c/f 5625

and so on until you either sell it or the value reaches nil.

please note that the warrior type vehicles are classed as vans and not cars.

normally what you do if you have a vehicle is claim all the expenses, such as all petrol, repairs, mot, tax, insurance and then claim the capital allowances and it all goes through the business.

or you could be better off just claiming mileage at 40p for the 1st 10000 miles and 25p there after, but if you do this, you can claim all the expenses or the capital allowances and you cant change what you claim for until you buy another vehicle.

so you need to sit down and work out estimated expenses against potential mileage claims to see which is best for you.

with regards to which type. it dont really matter, but you need to look at the costs of running them to see which is more beneficial and would give a better return compared to the amount you think you could claim as mileage. dont forget tho if claiming mileage you need to keep a detailed log of all trips, dates, from and to, who to see etc... and can be quite troublesome.

Answer 3

Get a vehicle that is most suitable for your job .. don't forget you will have to insure it for business use :-)

Most people go bust due to cash flow problems - if possible buy outright, even if you have to buy a reliable secondhand van (so no loans / repayments) ..