Taxation baffles the best of us.
Iain Paston from Vehicle Consulting explains how one recent change may affect you...
From April of this year (2007), the chancellor enforced a £3,500 taxable benefit for van drivers using company vans for personal use. Only journeys to and from the place of work will be allowed. Under these new rules, each van driver could end up £100 a month worse off and employers could be facing bills between £1,294 and £2,448 per driver depending on the tax rate for each employee. It is the employers/employees responsibility to prove to the Tax man that the vehicle has not been used for personal mileage and not for the Tax man to prove that it has been. This means the end to employees taking vans home with them (and the potential reduction in productivity if an employee has to start each day from the depot rather than going straight to their first job) or that all journeys (and mileages) must be recorded, either manually or electronically. Either way it is probably going to result in increased costs via tax bills or administrative overheads.
None of us like paying tax, especially on our essential tools of the trade, such as our vans. Did you know that by funding you van correctly you can get the tax man to pay for a proportion of your costs? If you contract hire you van rather than purchasing it (or any other method that counts the vehicle as an asset) the whole of the rental cost is deemed an expense and becomes 'tax deductable'. This means that for a sole trader (or partner in a partnership) who pays tax at the highest rates, this could amount to a 40% contribution towards you van from the tax man.
