Recovery Truck and Fuel Expences HMRC

Hasbeen

Friend is a mechanic employed PAYE.

In March he decided to earn some extra cash with vehicle transportation/recovery work

Bought Recovery truck at £6000

Informed HMRC at time to get Self Assessment set in place.

Now sent letter to complete SA for 2016-17. Which he can get from his P60 plus any thing earned in march. "very little"

We have both looked on HMRC site re claiming truck allowance and fuel expenses, but are both confused as it seems to be all self employed based etc?

Can he claim for total fuel cost put in tank or for only mileage?

How does he claim for truck? cash basis or annual investment allowance? we are both not tax savvy and are struggling to even understand what that means or what is best.

Any advice appreciated!! before he completes his online assessment.

Thank You

00ec25

err he is self employed! Employed and self employed are not mutually exclusive

he has both employee earnings via his employer (source: P60 figures), and he is now running his own business as a self employed "sole trader" (source: needs to calculate his profits himself).

as a sole trader (I assume he has not set up a Ltd Company of his own through which he does the recovery work) he claims AIA because it is not a "car"
https://www.gov.uk/capital-allowances/business-cars
and so qualifies for AIA as it is classed as "plant and machinery"
https://www.gov.uk/capital-allowances/annual-investment-allowance

as his business obviously involves using the vehicle, it will probably be his single largest cost and so it may be more cost effective (tax efficient) to claim the full costs incurred in operating the truck.
Technically he must adjust for any "private" use, but somehow I doubt he does the weekly shopping or goes visiting his relatives in a wrecker truck! So his private use adjustment will be very low (if not zero?)
https://www.gov.uk/expenses-if-youre-self-employed/travel

He can of course choose to claim the mileage rate (aka "simplified expenses"), but given the nature of his business I doubt that will be the better option, even if it is much easier to operate
https://www.gov.uk/simpler-income-tax-simplified-expenses/vehicles-

Note once he selects either full costs basis or mileage rate he cannot chop and change from year to year as the method must remain the same for that vehicle. if he buys a replacement vehicle then he can choose again for the new one

as he has only 1 month of income for 16/17 he will "create" a (large) trading loss which means he has several options on how to "offset"
http://smallbusiness.co.uk/offsetting-losses-against-paye-1274636/

Hasbeen

Thank you for your comprehensive reply.

I have given him a printout of your reply, and he is of the opinion that he would take the AIA route for the truck and the full cost basis for all the fuel and for any other expenses.

It would seem he is going to put in a lot of outgoings and very little income.

He told me he has to October to send info back.

I had advised him as he was registered now online it would be better to complete online than send in paper, but his choice.

Thanks again for reply:T

[Deleted User]

If he registers for online self assessment he has until 31st January 2018.

More importantly, as 00ec25 says, he has made a trading loss of just short of £6000 ('very little' income less AIA of £6000).

I imagine that he will have no idea how to claim this? He may wish to come back to us when filling in the form.

Hasbeen

[Deleted User] wrote:

If he registers for online self assessment he has until 31st January 2018.

More importantly, as 00ec25 says, he has made a trading loss of just short of £6000 ('very little' income less AIA of £6000).

I imagine that he will have no idea how to claim this? He may wish to come back to us when filling in the form.

Thank you.

I have said to him on line might be better.

Will probably will be back with questions at that time.

Thanks again both!:T