Bought brand new van this year Self assesment help please.

td23

Hi,

I have always done my own taxes however never have I bought a new van, which I did last year.

I'm wondering if any of you can advise me what to put down in self assessment please.

I'm a sole trader.

I paid £12k for brand new van.

2k deposit.

£380 first payment.

£170 per month thereafter.

Usually I literally count up all things I've spent on my business and subtract that from my total incomings. I understand that not to be the case when buying a new van.

Any advice would be greatly appreciated.

Many many thanks.

Nearlyold

Which method do you normally use for your Vehicle costs - Simplified eg 45p mile fixed cost or traditional accounting?

td23

I bought a van when I first started self employment. My first year I was helped with my return by tax office. Since then I haven't replaced the vehicle until buying a brand new one last year.

Usually I count all total receipts relevant to van, fuel, mots, service, tax etc and have them as business expenses.

My income is relatively low, I'm a sole trader and in first years never really made the tax threshold and my expenditure is pretty low too.

However this current tax year my business took off and my income has increased along with my expenditure.

I'm a sole trader and pay 20% tax direct from the firm I sub contract too.

Hope I've given you enough info.

Thanks for your reply.

[Deleted User]

Given that you can claim the full cost of the van as a one-off capital allowance against your profit (AIA). You can also claim the interest payable each year on the loan - not the repayments!

jimmo

td23 wrote: »

Usually I literally count up all things I've spent on my business and subtract that from my total incomings.

That’s exactly how the cash basis works and buying a van doesn’t disqualify you from that. Buying a car would but not a van.
However I would imagine that your finance and interest charges will be rather more than the £500 /year limit on the cash basis.
In this link the interest limit is on page 1 and the restriction for cars is on page 4 but if you’re not familiar with it you should read the whole document.
https://www.gov.uk/simpler-income-tax-cash-basis/overview
Therefore if you are content to limit the finance charges to £500/year you could continue as you have been doing.
That is probably the simplest thing to do but may not be the wisest. You haven’t said what you actually do but the fact that you have bought a brand new van rather suggests that your business is not exactly struggling and now might be a good time for you to switch to traditional accounting methods. It can be much more complicated but should provide opportunities for you to be much more tax efficient than you are now.
However January is not the best month to go looking for accountancy advice. An awful lot of accountants will be rushed off their feet trying to meet the 31 January deadline for their existing clients so will charge big money to new customers who are going to add to their problems. It even gets much busier on here towards the end of January.
If your own Tax Return has to be with HMRC at the end of the month your best option will probably to complete your Return using your normal method but limit the finance charges to £500.
In that way you should get your Return lodged before the deadline and escape any late filing or late paying penalties.
You will then have a year in which to amend your Return but don‘t leave it till this time next year
Once the rush is over you should find it much easier to find an accountant if that is the way you decide to go or seek more advice on here and develop a much better understanding of tax matters without the added worry of meeting the 31 Jan time limit.

td23

So I can basically deduct the total cost of the van from my total income of that tax year? So say I brought in 35k before tax that year, I could deduct £12k from that figure? But not the repayments obviously?

I'm presuming I still subtract the insurance, tax etc as usual?

Thanks again for your advice.

The problem I've got if that's the case is I'm wanting to go for a mortgage in April next year so I'm wanting my earnings to look as good as they can...

td23

Jimmo you are exactly right with your assumptions.

I'm a sole trader in construction, and the tax year which is due now is the year I started sub contracting, so my earning have pretty much trebled. I also bought the new van that year.

So I'm in a bit of a different position to previous years.

I obviously want to claim as much tax back as I can but I also want to get a mortgage so I need my figure for this return and the one I will do in April for this year to look good.

What do you mean by 'Limit the financial charges'?

Thank you

jimmo

td23 wrote: »

I obviously want to claim as much tax back as I can but I also want to get a mortgage so I need my figure for this return and the one I will do in April for this year to look good.

I can understand that but I think its important for you to understand that you have a deadline to meet with HMRC but anything you declare now is not set in stone.
You really need to get your Return in and maybe overpay a little tax by 31 Jan. As far as HMRC is concerned you will buy yourself another year to sort things out properly without incurring penalties but as far as you are concerned your mortgage application requires you to get your tax affairs in order sooner rather than later.
At the moment I really think you need an accountant to sort you out taxwise but now is not the best time to look for one. Next month would be much better. March would be better still and the corrected figures can easily be in place before you apply for your mortgage.
With regard to “finance charges” under the cash basis you are limited to a claim of £500. You seem to have bought your van on a finance deal so you will have an agreed purchase price for the van but the total amount you will pay out on that deal will be rather more than the purchase price. They will be the finance charges but however much they are, under the cash basis you will only be able to claim £500 per year.
My guess would be that you really should switch away from the cash basis onto traditional accounts and you will almost certainly need professional help to do that.

td23

Thanks for taking the time to reply to my questions jimmo. Your a good man. My plan is to submit my self assesment myself as usual this month ( all my totals are in order and I let really only need to log on and input figures), I was unsure of how the purchase of a new van fit into it.

I plan to get an accountant in the next month or so with a view to having them look over the tax year I'm submitting this week, and also submitting this current tax years SA.

I've just found myself in a position where I could realistically get/afford a mortgage and I'm itching to get on the property ladder.

Thanks again.