First years return Help required

antjmurray

Im looking to submit my first years self employed tax return and need some help. I purchased an ice cream van for £8700 back in march 2014 and started trading on the first day of the financial year. Im trying to complete an online return and have made a small profit on the year but am wondering where I include the purchase of the van on the return. I presumed I could use depreciation for the van over 3 years which is how long I think the van will last but im reading about Annual Investment Allowance. Am I right in how ive interpretated it in that I take the full amount of the van off my small profit leaving me at a loss and I can use that loss next year against any profits.
Thanks in advance

[Deleted User]

You can claim the full cost of the van and create a loss. You can carry forward the loss if unable to set it against income of the previous year or the previous three years. What was your income in 2013/14?

antjmurray

I was a partner in a seperate business which has now been disolved. It was making small profits and dont wish to use the van cost against previous tax years but am I able to carry this over?

[Deleted User]

Yes - you actually have no other option!!

antjmurray

Ok, so if after using the van purchase as AIA gives me a total income figure of say -6k then next year if I made 6k profit I would use that to offset the profit and come out with a figure of 0.

[Deleted User]

That is correct - and you would gain nothing unfortunately. £6000 profit means no tax as does no profit - those are the rules !

antjmurray

Its handy for tax credit purposes to get free childcare so isnt completly worthless

[Deleted User]

antjmurray wrote: »

Its handy for tax credit purposes to get free childcare so isnt completly worthless

Yep - good point!!

Darksparkle

antjmurray wrote: »

Its handy for tax credit purposes to get free childcare so isnt completly worthless

But could prompt a compliance check regarding your self employment if not making NMW x declared working hours.

antjmurray

Its not defrauding anyone your just using the AIA and offsetting against profit

Darksparkle

antjmurray wrote: »

Its not defrauding anyone your just using the AIA and offsetting against profit

Not saying you are. However tax credits won't see your SA return, they just see that you are declaring no income.

From April 2015, they started doing compliance checks into those not earning at least NMW. More info here - http://www.revenuebenefits.org.uk/tax-credits/guidance/how-do-tax-credits-work/self-employed/

Only giving you a heads up.