First time tax return, capital allowance?

chelseablue

My husband became self employed in August last year so this is our first time doing a tax return. 

Can I claim the capital allowance for the car he uses for work? 

We purchased the car in 2019, the co2 figure is 115mg and its currently worth around £9,000

If I understand the guidance correctly we put down 6% of £9,000 in the capital allowance box? So £540

Is this correct or have I got that totally wrong?

Pennywise

You also have to adjust for the private use proportion, i.e. if he uses it 50:50 between private and business use, then the claim is adjusted by 50%.

He may well be best just to claim the mileage allowance of 45p per mile rather than claiming actual expenses and capital allowances.

chelseablue

Pennywise said:

You also have to adjust for the private use proportion, i.e. if he uses it 50:50 between private and business use, then the claim is adjusted by 50%.

He may well be best just to claim the mileage allowance of 45p per mile rather than claiming actual expenses and capital allowances.

Thank you. He uses the car for just business. When he's not at work we use my car. 
I've worked out the costs for the car and it works out higher than the mileage rate we would get so going with claiming the actual expenses. 
In this case am I correct to put the £540 figure as a capital allowance? 

[Deleted User]

The figure that you would use for capital allowances would be the value of the car at August 2020, when the business started, not when the return is completed. So, if it was worth 10000 then you would claim 600, next year 564 (6% of 10000 minus 600) etc If you are certain that there was no private use you would be correct to claim the full 6%.

chelseablue

Thank you. 
Can we claim capital allowance for tools as well? He has spent about £700 on tools since August. I have put this figure in the expenses part but not sure if we can put a capital allowance figure too? 

[Deleted User]

chelseablue said:

Thank you. 
Can we claim capital allowance for tools as well? He has spent about £700 on tools since August. I have put this figure in the expenses part but not sure if we can put a capital allowance figure too? 

Small tools (perhaps someone still practising can clarify what value is ‘small’ these days) could be claimed as expenses. Larger tools should be claimed as capital allowances / First Year Allowances. For example, I would claim the cost of a hammer as an expense. A compressor would qualify for capital allowances.

chelseablue

Thank you he's a ducting fitter so not big machinery. Most he has spent is £180 on a drill 

[Deleted User]

chelseablue said:

Thank you he's a ducting fitter so not big machinery. Most he has spent is £180 on a drill 

Personally - I have no idea what that is! Don’t forget to include the value of the tools he owned when he commenced - presumably he did not start with no tools at all?

Additionally, as I am sure you may already know, please don’t forget to include any income earned elsewhere (e.g. from employment) prior to the commencement of the business i.e. from 6th April 2020 to August 2020. 

chelseablue

Yes there were questions regarding whether he was an employee in the tax year so I filled out all that using his P45. 

For the tools he did start with nothing as he's still an apprentice so buying stuff as he goes along. 

If I've done it correctly the calculation says £2,300 rebate due to him (he's in the Construction Industry Scheme so they pay 20% on everything they earn then get a rebate) 

[Deleted User]

chelseablue said:

Yes there were questions regarding whether he was an employee in the tax year so I filled out all that using his P45. 

For the tools he did start with nothing as he's still an apprentice so buying stuff as he goes along. 

If I've done it correctly the calculation says £2,300 rebate due to him (he's in the Construction Industry Scheme so they pay 20% on everything they earn then get a rebate) 

Sounds like you have a good handle on it. Obviously we can’t comment on the quantum of the repayment without knowing all the income details.

chelseablue

[Deleted User] said:

chelseablue said:

Yes there were questions regarding whether he was an employee in the tax year so I filled out all that using his P45. 

For the tools he did start with nothing as he's still an apprentice so buying stuff as he goes along. 

If I've done it correctly the calculation says £2,300 rebate due to him (he's in the Construction Industry Scheme so they pay 20% on everything they earn then get a rebate) 

Sounds like you have a good handle on it. Obviously we can’t comment on the quantum of the repayment without knowing all the income details.

I don't feel like I do  
Since August his self employed income has been £12,310 and he's paid £2,542 in tax through the CIS deductions