From Self Employed back to Employed 6 March at 3:49PM in Cutting tax 19 replies 236 views

purdyoaten2

Jeremy535897 said:

I think this may need further thought. Purdyoaten is correct when he says that the business proportion of the van's reduction in value from the date it entered the business (or purchase price if bought after he started trading) to the date he ceased the business, and of course that becomes irrelevant if a mileage claim is to be made. The question is what is business mileage? The best outcome is where he goes straight from home to varying job sites, travels between job sites or building suppliers etc, and comes home, never using the van for a private journey. In that case the odometer will give you the business mileage when he ceases trading on his own account. If the van is used for an occasional trip that is not business related (for example using it to collect a television), that mileage is deducted. At the other extreme, if he went to the same workplace day in day out, that would probably become commuting, and not be allowable at all.

Without mileage records, and with mixed use, he will have to estimate his business mileage, but presumably his bills and his work diary will remind him where he went on business and when. Google Maps can find the distance involved. HMRC might challenge the claim, but I would be surprised if they did (they simply haven't the resources), and if he has gone to the sort of effort I describe, he can argue his case if it comes to that.

Great explanation! 

Lisa1978

Thank you both! 

I used the simplified expenses calculator and it came back that that would be the best option but i don't understand why when simplified expenes = £4812 claim per year and actual costs claim £14,600 per year? 

Can you please explain? 

If you use simplified expenses

You could claim:

• £4,500 for your car or van

• £312 to claim for working from home

Total to claim per year: £4,812

If you work out the actual costs

You could claim:

• £2,400 for the running costs of your car, van or motorcycle

• £10,800 of capital allowances for your car, van or motorcycle

• £1,400 for working from home

Total to claim per year: £14,600

purdyoaten2

That includes the cost of the van (presumably all business?)

However, because the business has ceased, you must include the value of the van at date of cessation as a balancing charge (negative capital allowances)

If it was, for example, worth £10000 at cessation date, that would reduce the claim to £4600.

I think that you would have some difficulty with that use of home claim. Have you the records to justify it? Another reason to use the simplified expenses option?

Lisa1978

purdyoaten2 said:

That includes the cost of the van (presumably all business?)

However, because the business has ceased, you must include the value of the van at date of cessation as a balancing charge (negative capital allowances)

If it was, for example, worth £10000 at cessation date, that would reduce the claim to £4600.

I think that you would have some difficulty with that use of home claim. Have you the records to justify it? Another reason to use the simplified expenses option?

90% business as my husband uses my car for most personal use (weekends).  

For calculations, he bought the van in May around £12k - 2nd hand from a dealer and its financed at £150 a year for 4 years (as he traded in his other van).  I'd say the van is now worth £10k (good guess on your behalf).  

The home claim is for electricity/gas for WFH approx 30 hours a week but no records to prove it.  He has a large workshop that he works from within our garden. 

I understand now why simplified may be easier especially the van scenario.  

Thanks 

Jeremy535897

Remember that simplified expenses for use of home as office are not £312 a year. That is for employees. For the self-employed, see:
https://www.gov.uk/simpler-income-tax-simplified-expenses/working-from-home

sheramber

The home claim is for electricity/gas for WFH approx 30 hours a week but no records to prove it.  He has a large workshop that he works from within our garden.

How have you arrived at the  figure of  £1400 ?

Lisa1978

Jeremy535897 said:

Remember that simplified expenses for use of home as office are not £312 a year. That is for employees. For the self-employed, see:
https://www.gov.uk/simpler-income-tax-simplified-expenses/working-from-home

Hi i got the £312 from the simplified expenses info.  It is > 101 hours per month = £26/month x 12 = £312. 
Assuming this is ok

Lisa1978

sheramber said:

The home claim is for electricity/gas for WFH approx 30 hours a week but no records to prove it.  He has a large workshop that he works from within our garden.

How have you arrived at the  figure of  £1400 ?

This is an apportionment of our gas/electricity bills for the year, based on size of workshop and usage. 

Jeremy535897

Lisa1978 said:

Jeremy535897 said:

Remember that simplified expenses for use of home as office are not £312 a year. That is for employees. For the self-employed, see:
https://www.gov.uk/simpler-income-tax-simplified-expenses/working-from-home

Hi i got the £312 from the simplified expenses info.  It is > 101 hours per month = £26/month x 12 = £312. 
Assuming this is ok

I never noticed that they resulted in the same figure!