We are thinking of buying two Toyota hi lux 4x4 cabster pick up trucks through our vat registered company. What would be the tax liability for the company and what would the tax liability for the individual both are 22% tax payers. Kind Regards
Our expert Gary answered...
Good morning Phil
Thank you for your enquiry.
The business can claim the VAT back on the purchase price (which should be restricted by any private use element) and then claim writing down allowances on the capital cost (assuming you purchase and not lease the pickups). You may be able to claim 100% write down in year one through your Annual Investment Allowance which is £100,000 this financial year.
For the drivers, there is a fixed £3,000 annual taxable benefit for private use, plus a further £550 if there is any private fuel provided. Assuming there is private fuel, this gives a total benefit of £3,550 which for a 20% tax payer gives a charge of £710 per annum (this is the actual amount of tax paid by each individual for the private use of the vehicle and private fuel).
As always, you should check this out with your Tax Inspector before committing to obtaining these vehicles.
You may want to consider Contract Hire instead of purchasing the vehicles, in which case you can offset every rental against your company's tax position. This will not affect the drivers' tax position.
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