A friend told me I could purchase a van or motorcycle through my company and not pay any tax on it. Is that true?
There is a grain of truth in this myth, but there will still be some tax to pay if you use the vehicle for personal journeys. When your company purchases a van or motorcycle for business purposes it will reduce the taxable profits by 100% of the cost of the vehicle. This only applies where the purchase is covered by your company’s annual investment allowance (AIA) of £50,000. The AIA cannot be claimed for the cost of cars.
However, when you use the vehicle for non-business journeys there will be a benefit in kind tax charge for you and a NI charge for your company. If you want to transfer the van or motorcycle into your own hands from the company’s ownership, this must be done at the market value and again there will be a benefit in kind charge unless you pay the full value to the company. What’s more, the disposal by the company will claw-back the AIA given and increase the company’s taxable profit for the period in which the transfer is made.
