If you’re looking to buy a new car, then you’ve probably also been looking at the option of purchasing a fully electric car. However, don’t get caught out by the common misconception that you will be able to claim back VAT in full on your purchase.
Choosing the right van for your business requires consideration of a lot of things; boot space, emissions and insurance costs. But it's also worth thinking about the tax implications of the van you're looking to buy, particularly if you're purchasing it through a limited company.
For owners of small businesses, taking out a company car can prove false economy - often creating more personal tax liability than it saves on the company’s corporation tax bill.
Despite rising tax charges year on year, many people still enjoy the convenience offered by a company car. The benefit in kind tax rules reward those who choose cheaper, lower emission cars with a lower tax bill.
Company cars are a popular benefit and are often something of a status symbol. But, they have also been an easy target for the taxman.
It is possible for a business to set the full cost of a car against profits in the year of the purchase if the car is a low emissions car that qualifies for the first-year allowance. A 100% first-year allowance is available in respect of cars that meet the definition of a `low emission car’ for capital allowances purposes.