Self Employed Motoring expense - WDA & Depreciation

wolverine03

Hi guys, I really need some help. If possible please double check my calculations:

I am self-employed and pay Income Tax. My accounts are drawn up for the year to 5 April 2012 and I spend £20,000 on a car that I use 40 per cent for my business that has CO2 emissions of 165g/km, is the calculation as follows:

Tax computation:

Cost of car = £20,000
Writing-down allowance deducted (£20,000 x 10 per cent) = £2,000
Value to carry forward = £18,000
Capital allowance I can claim = £2,000*40% = 800

Income & Expenditure account:

Depreciation = 4,000 every year (Over 5 years, Straight line). This is the amount you put in the I&E account - please confirm.
NBV c/f = £16,000

Am I correct in thinking that depreciation policy is as follows? What if Business use changes 40% to 50% after a few years?

If 40% Business Use = Depreciation is straight line 5 years
If 50 % Business Use = Depreciation is Reducing Balance 5 years

If I'm missing anything out please let me know.

Thanks guys

nomunnofun

Tax computation is fine.

Income and expenditure account - private use is irrelevant as depreciation is not an allowable expense. Furthermore, if you do not have a balance sheet and have only an I & E account, I see no need to account for depreciation at all.

wolverine03

Thanks nomunnofun

Its only an I&E account - no Balance sheet. But i was under the impression i had to include it, eventhough i would have to add it back in my tax computation and claim capital allowances instead.

Thoughts?

nomunnofun

wolverine03 wrote: »

Thanks nomunnofun

Its only an I&E account - no Balance sheet. But i was under the impression i had to include it, eventhough i would have to add it back in my tax computation and claim capital allowances instead.

Thoughts?

No need whatsoever. The balance sheet is, in effect, a valuation of your business at a specific point in time i.e. your year end. Assets including buildings, plant, fixtures and fittings in addition to vehicles are depreciated according to accounting rules in order to arrive at an accurate balance sheet and valuation of your business and for not much other purpose really - hence their disallowability (is that a word?) in the tax computation.

clairbear_3

apologies for hijacking thread but have similar question..I do my OH self employed accounts usually very straightforward.however he recently bought brand new vehicle(taxi).His tax year runs from 1 Aug 2011-31 july 2012..he bought taxi for £12k on 9 July 2012..what allowances(depreciation?) can be claimed? Hopefully 3 equal amounts split over next 3 tax years?