Will a new van this year wipe out my tax bill for 2016?

[Phil]

No good ever came of opening a brown envelope, I have tax bill that's about as much as a new van and my ten year old Combo is on its last legs.

 

[Chalked]

It won't wipe out the bill you have to pay now. That will still have to be paid!
If you buy a new van outright, even if part is on finance you can claim tax relief on the full amount in the first year.

 

[Phil]

So.....lets say my tax bill is roughly 11 grand (2014), if I buy a new van this year for say 12 grand, I don't have a wopping bill and the start of 2017?

 

[Chalked]

No.
If you buy a van for say £10,000 you can claim 20% of that ( £2000) or that could drop you out of some 40%.

 

[Phil]

No.
If you buy a van for say £10,000 you can claim 20% of that ( £2000) or that could drop you out of some 40%.

What does my accountant mean when he says its 100% tax deductible then?

 

[mfgs]

A 10k van will mean you don't pay the tax on 10k of your profit, as your profit is now 10k less due to the van purchase. It doesn't mean you can deduct 10k off your tax bill.
So if you have made 30k this year for example and have to pay 6k in tax at 20%
you buy a 10k van and your profit would be 20k not 30k so now only 4k to pay in tax.

 

[Rickster123]

In other words phil kiss goodbye to waitrose and say hello Lidl!

 

[Phil]

A 10k van will mean you don't pay the tax on 10k of your profit, as your profit is now 10k less due to the van purchase. It doesn't mean you can deduct 10k off your tax bill.
So if you have made 30k this year for example and have to pay 6k in tax at 20%
you buy a 10k van and your profit would be 20k not 30k so now only 4k to pay in tax.

Got it, that's the explanation I needed.

 

[lame plumber]

In other words phil kiss goodbye to waitrose and say hello Lidl!

a really big new van and it is Lidl bins at the back of the store.................

 

[rocketmanbkk]

A 10k van will mean you don't pay the tax on 10k of your profit, as your profit is now 10k less due to the van purchase. It doesn't mean you can deduct 10k off your tax bill.
So if you have made 30k this year for example and have to pay 6k in tax at 20%
you buy a 10k van and your profit would be 20k not 30k so now only 4k to pay in tax.

100% correct