Self Employed, sold personal car, question?

billymadbiker

Hi,
I am self employed,
I run a van for work so put 100% of the running costs of this against my tax return.
I also have a personal car, all the costs of running this I put as 'personal, disalowable' (ie, part of my wages) on the tax return.

In Dec 2008 I took out a loan and bought a new 'personal' car. I have been putting the monthly loan repayments into my self assement return as personal expenses (disalowable for tax).

I did not sell my previous personal car until July 2009, I recived £4500 in cash which I paid into my (only) bank account.

1st question, The car I sold only cost me £4200 so, I made £300. As I am self employed is this counted as profit?
I presume not as the car was pair for from taxed personal income and, although I did some work on the car to increase it's value this was done at weekends and working on cars is not anything like my normal job.

2nd, Where do I put (if anywhere) the £4500 on my 08-09 tax return?
My instinct is to leave it out all together but I do not want to get the taxman looking at my bank statments and questioning why it's not been declared

theculverhouses

Hi again billymadbiker

Nope the £300 profit is not taxable. You are not trading as a car salesman after all and if the UK gov'n taxed you on the profit think of the hundreds of thousands of us that normally lose money on selling on a car.

I wouldn't bother with the £4500 on the basis that you know where it came from, if it's ever queried then you can print out this page of the forum and annotate your bank statement to say what it was for. That should easily do it.

Cheers
Tim

billymadbiker

jimmo wrote: »

On a purely technical basis, I disagree with that. The OP bought a car, did some work on it to improve its value and sold it at a profit.
That is an adventure in the nature of a trade creating taxable profits.

That is almost the way I saw it!
However, to agree with the thread above, that would then mean I would be alowed to claim the fuel use in the personal car (when letting viewers taking it for a test drive etc) as a 'motor expense'

I am mostly tempted to leave it out of my tax return but it does show on my bank statments and having been investagted once..

jimmo

Compared to your other problems, this really seems to be small beer, but, the fuel used in test drives is allowable against the profits of this particular adventure.

billymadbiker

Jimmo,
I think, in light of my other problems, I will leave this out all together and come back to it if they drag me in to the office and ask me about it!!

zygurat789

If you are self employed and VAT registered then all your activities are liable for VAT. So again, technically, you should declare output VAT on the profit of the transaction, £300.

no-oneknowsme

billymadbiker wrote: »

Hi,
I am self employed,
I run a van for work so put 100% of the running costs of this against my tax return.
I also have a personal car, all the costs of running this I put as 'personal, disalowable' (ie, part of my wages) on the tax return.
QUOTE]


Is this correct ? Should the running costs of a personal vehicle which have nothing to do with the business even be included on the return ?

billymadbiker

I don't actually put the running costs of the personal car down, just my personal drawings from the bisuness in one lump sum from which I take the money to run the car.

Hence my question, If I have been taxed once on the income used to buy/run the car in the frist place should I be liable for tax on any profit I make from the sale of it?

chrismac1

Here is what I would say if I was billy's accountant:

The nature of the asset - car - is that it depreciates, hence on the face of it not a trading asset. The motive in buying the car was to run the car, and presumably the car has had some private mileage put on the clock. This appears to be a one-off transaction not part of a series of transactions. The OP modified the car, which is one factor in many "Badges of Trade".

In my view there are many more arguments against this being a trading profit than there are in favour. If he was a client I would only get to know about this if he told me, after all he uses the van for business and is not claiming any business miles on the car. If he did tell me about it I would explain there was a remote risk of this being considered trading due to the modifications, but I would not be putting the profit down on the tax return and I'd have the above arguments on Badges of Trade ready to run if there was an enquiry.