Whilst purchasing a van to use in your business, is a significant investment, part of that cost can be mitigated by claiming tax relief on the cost of the van and the associated running costs.
Why are capital allowances beneficial?
Capital allowances are the way in which tax relief is given for the cost of purchasing assets, such as a van, for your business.
Vans purchased for business use qualify for the Annual Investment Allowance (AIA).
Under the AIA, you can deduct 100 per cent of the cost of a van from your taxable income in the year you purchase it, as long as your total spend on assets qualifying for the AIA does not exceed £1 million.
How do I claim the full cost of my van?
To claim a tax deduction for the full cost of your business van, the following criteria must be met:
- The van must be used solely for business purposes. To claim a deduction for the full cost of the van, it must be used solely for business purposes. If there is an element of private use, tax relief can only be claimed on the proportion relating to business use.
- Keep accurate mileage records to support the proportion of business use claimed.
Claiming ongoing expenses of van ownership
You can claim a number of allowable business expenses as part of van ownership, including:
- vehicle insurance
- repairs and servicing
- fuel
- parking
- breakdown cover
Again, if there is private us of the van, tax relief can only be claimed on the proportion relating to business miles travelled. When considering this, please bear in mind that HMRC considers home to work travel to be private travel. In addition, tax relief cannot be claimed on fines.
To maximise your financial benefits, get in touch with our team.
