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Have you actually looked at the price of vans lately?
You might be in for a shock!
Having just done a quick search for used vans, I found plenty about for under 7k, these were under 50k mileage. There's others under 5k for bit higher mileage.
Yes the 4k is wholly tax deductible either in one tax year or spread over several.
As Andrew says the price of used vans are now ridiculous and I think all 5k will buy is a money pit.
We stopped buying used sometime ago as we ended up with unreliable vehicles which needed costly repairs on a regular basis. The money we were spending equated to the finance payments on a new vehicle .
Yes buying the first new vehicle was financially challenging, we used a zero percent credit card to pay the vat as a deposit and had the balance on HP over 5 years.
We never keep the vans for the 5 year finance term, we swap after 3 years so we always have vehicles under warranty, after 3 years there's some equity in the vans which we use as deposits on new vans and the remaining value of the vans clearing the 2 years left to pay the finance company. Our maintenance costs for the 3 years are one set of tyres and 2 services. This system works for us and has done for 20 years, the interest on the finance payments is wholly tax deductible, and the difference in value from the part ex to the cost of the new van is also tax deductible.
Last time we swapped 2 years ago we got 3k more for our part ex than we had paid for it 3 years previously! Due to the shortage of new vans at the time it drove up the price of used vans, nice work if you can get it! Probably never happen again.
Martin perhaps worth considering new using this system rather than used ?
There can be a ‘Balancing Charge’, depending on what you have claimed or ‘written down’ over the years for the old van.
So if the old van was say £10,000 and over a number of years you have claimed £7500 against tax, but then you have sold it for £5000, then there is a balancing charge of £2500 which is added to your turnover.
‘Write down’ is currently 18% per year. You can claim all of, or as much as you like in the first year and then what’s left is claimed at 18% per year.
So if your van is £20,000 you could claim say £10,000 in year one [the year you bought it] and then 18% of the remaining £10,000 in the second year and so on.
So Year two would be £1800 – year three would be £1476 – year four would be £1210 and so on.
Also, you really need to claim the full £5000 [as mentioned in your post] and not just the £4000 difference.
This can take two forms. If, for example, you paid £5000 for your old van, but have only claimed £4000 [or less] against tax, then you just claim the full £5000 of the new van, with no mention of the old one as regards any balancing charge.
But if you have claimed the full £5000 of the old van, then you still ‘write down’ the full £5000 of the new van, but add a £1000 ‘Balancing Charge’. So in this scenario you are still only gaining the benefit of the £4000 to swap, but you have accounted for it properly in line with what HMRC would expect to see.
You are correct. If you have done anything more complicated with recent purchases the simple way is to ask your accountant to answer the question
You need to Budget a lot more than 5k for a decent van
you should consider leasing or pcp if your doing mainly local calls
you should think in terms of around 10k at least