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UK Tax Return - car purchases & sales?
I am doing our tax return (deadline today). I'm not sure how to deal with our car purchases/sales, which were mainly used for business. During the year, we sold our Audi for £100 scrap (it had a written down value brought forward from previous year of £280, so we made a loss in that sense), then we bought a Toyota for £450 but then it was in an accident and we received a £1,000 payout, and then we bought a Mitsubishi for £400 which we still have.
Do I count the costs of buying the cars as expenses and the income from scrapping the Audi and Toyota as an expenses credit (or as income or Capital Gain/Loss, not sure how to deal with that)?
We also sold a van for £380 scrap (having bought it the year before for £800), so how do I deal with that? I believe vans and cars are treated separately in the Return (van is part of Annual Investment Allowance but car is part of Writing Down Allowances). How to I treat the income from scrapping the van, as expenses credit or Capital Gain or ignore as it was part of AIA?
jewelkin - thanks, I get the Mitsubishi depreciation bit. But not sure what you mean by the Audi £180 loss is 'tax allowable' - if I remember right, normally I would claim 20% of the £280 brought forward as a Capital expense for the year (= £56), so do I offset the £100 gain against the £56 expense and state the difference as a Capital Gain or something? Also, how do I declare the £1,000 income, do I declare the business portion as business income or as expenses credit (as its payment for a car, isn't it a Capital Gain?), and is the rest a personal income? I'll check the HMRC guidance papers more.
2 Answers
- Anonymous8 years agoFavorite Answer
You claim capital allowances on your cars. I think you understand that bit.
In the year you dispose of an asset (the car) you don't work out the capital allowance on it, you instead work out the balancing charge or the balancing allowance. This is the difference between the sale price and WDV at the start of the year (or the cost or bought in the year).
Audi - Allowance £180
Toyota - Charge £550
Mitsibushi - Capital Allowance £40. (the rate is 10% for cars purchaed after April 2009 and with CO2 above 160g, which I suspect the Mitsibushi has).
There is a special box in the tax return for entering balancing charges. The allowance is treated like capital allowances and put in the relevant CA box for cars.
The Van will be in your main pool of expenditure. All you do is deduct £380 from the pool before you work out this year's allowance.
Source(s): Read pages 6 onward of the guide http://www.hmrc.gov.uk/worksheets/sa103s-notes.pdf - jewelking_2000Lv 58 years ago
Audi £180 tax allowable. Toyota, £550.00 profit needs to be declared,
Mitsubishi you would capitalise the £400.00 and depreciate according to your usual writing down allowance.
Van would be £800.00 cost less your AIA taken last year plus your £380 receipt can be claimed for.
Final bit of advice, it's worth getting an accountants help for this as tax is a minefield. I do and i studied accountancy myself. Better to spend your time on your business.
