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TonyTax
TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I AM A SELF EMPLOYED CARPENTER I HAVE SPOKEN TO NORTHGATE

Resolved Question:

I AM A SELF EMPLOYED CARPENTER I HAVE SPOKEN TO NORTHGATE VEHICLE HIRE ABOUT LONG TERM VAN HIRE. MY QUESTION IS CAN I SET ALL THE HIRE COST AGAINST MY TAX BILL ? IE IF MY TAX BILL FOR ANY GIVING YEAR WAS SAY £10,000 POUND BEFORE I INCLUDED COST OF VAN HIRE IF VAN HIRE OVER YEAR SAY £5000 WOULD MY TAX BILL BE REDUCED BY THAT AMOUNT LEAVING A BILL OF £5000 .
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi.

You can claim tax relief for your van hire or lease costs against your self-employed income/turnover with a disallowance for any private use. If your hire or lease costs are £5,000 and there is no private use, they reduce your profit by £5,000 not your tax liability. So, if you are a basic rate taxpayer, you will reduce your tax liability by £1,000 per annum (£5,000 x 20%) and your Class 4 NIC by £450 per annum (£5,000 x 9%).

If you are VAT registered in the standard scheme, you can claim back the VAT on your lease costs with a restriction for private use.

I hope this helps but let me know if you have any further questions.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15884
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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