How do i include my new van in online S/A

bomberman

Hi, as usual i have left filing my online self assesment untill last minute and need some advice on how to go about including the purchase of my company van.
I purchased it in the summer 07 for £5500 and dont have the slightest clue as to how i include this in my return along with any depreciation that may have incurred.
I usually have no trouble filing my retirn online its just the van has thrown me a little.
Thanking you all in advance for your much needed help and advice
Brettt Cooper

jinco999

Brett,

For your own set of accounts you use depreciation but for taxation purposes you need to use capital allowances.

It can be quite a complicated area as there is many changes going on in this area but for the year you are doing you should be allowed to claim 50% of the value in the first year ( First year allowance for commercial plant and machinery), usually in following years you can then allow/ deduct from tax bill 25% of the balance, but I believe this has now been reduced to 20% for 08/09 tax period.

Example
Purchase price 07 5500
First Year allowance 2750 (Put in tax return 07/08, return due by 31/01/09)
Balance 07/08 2750
Next Years @20% 550 ( In next years tax return)
Balance 08/09 2200
........ etc

This should then give you our rate 20/40 % tax off the amount of £2750 off this years bill.

A good place for easy to understand guides is businesslinks website.
http://www.businesslink.gov.uk


Steve

bomberman

Thanks for your help, i think i can just about get my head around that.
Can anybody give me a little more help with the depreciation side of things?
Tanks

mrkbrrws

Depreciation isn't allowed for tax purposes, are you trying to prepare full accounts for your business?

When you say "company van" do you mean you have a Limited Company or are you self employed as a sole trader?

bomberman

Hi i am self employed as a sole trader ( a handyman to be specific ).
Maybe i am worrying about the depreciation side of things to much, i am a complete newbie at this so please excuse my ignorance i just thought you use it in your tax return

toby_puppy

as a previous post states, you can claim £2750 as a capital allowance on the tax return. this relates to the first year allowance, 50% of the cost price of the van. the amount gets entered on the capital allowance section of the tax return. so, you benefit by having £2750 deducted from your taxable profit. eg if you had a profit of £12750 to pay tax on (if you hadn't bought the van), you will now only pay tax on a profit of £10000.

the depreciation you mention is something which is part of the accounts as opposed tax return. if you were preparing a full set of accounts with a fixed asset register, then the purchase price of the van would be shown and it would be depreciated by 25% each year. however, the depreciation is added back anyway in the tax computation so is nothing for you to worry about.

next year you will claim capital allowances on the brought forward value of your van, which will be £2750 x the 2008/09 capital allowance rate, so you are constantly writing down your van's value as you claim.

It may be an idea to keep a note of the £5500 less £2750 = written down value £2750 to carry forward, so you know where you are next year when you need to claim.

if you are vat registered and you reclaimed vat on the van then you should only claim on the price net of vat. if not, then use the £5500.

hope this helps.

bomberman

Thanks for all the advice, i have just entered my van into the capital allowances now i could do with some advice reguarding the loan i took out to pay for it .I am unsure how to include this loan in my s/a.
Thanks again

toby_puppy

Hi, you don't actually claim the loan repayments on the tax return, just the interest element. So if you look at your loan agreement/statements it should show the interest charged. If you have a loan agreement for example and it shows total interest for the term of the loan, divide the total by the duration of the loan eg. £1200.00 total interest over 3 years = £400 per year and then bring in the relevant amount on the tax return in the self employment expenses section.

Remember, if there is any private use on the van, then you should restrict the interest claim by the relevant percentage but assume as it's a van then there won't be.

bomberman

Right so do i actally need to show the £5500 Loan in my s/a as it went into my business account then went out when i paid for the van?
Thanks for all you help

ceeforcat

No - I presume that you are not doing a balance sheet. Using jostenning's example: let's say you make up your books to 31st March (or 5th April) and you bought the van on 6th October 2007. You pay interest of £400 per year and, therefore paid £200 in 2007/08 tax year (6/12 x £400). You claim £200 less any private use element.

In 2008/09 you will claim £400, again in 2009/10 and finally £200 in 2010/11.