Self Assessment Accounts Question re Vehicle Written Off.

Maharishi

Good day Forumites, I need a little assistance ...

Sole trader for over 40 years and been doing own accounts since my chap retired pre plague.  All has been reasonably simple up until now but events of the last month have caused some confusion for me.

I bought a van solely for business use back in 2014.  It's an 04 plate so was already 10 years old and I paid £2300 for it.  I use the equipment pool with the WDA of 18% rather than the 45p/mile allowance and this is where I am in need of help.

Two weeks ago the van stopped and the predicted cost to get it back running again is north of £1100.  I don't have 1100p and even if I could afford the repairs, throwing 4 figures at a 20 year old Ford Transit Connect is just daft, so I have scrapped it.  Because my work has been in slow terminal decline, (hospitality), I have only needed to claim the allowance 4 or 5 times during 2014 to now, so the vehicle has some residual value, on paper.

I am going to do a daily hire on the days that I need a van because a) I can't buy another and, b) I only have 29 days between now and year end that I will need one, so it's the only viable solution.

The question is; when I do my accounts where the loss of the van will be included, where will I enter that on the SE form?  And where will the hiring charges also be entered?

Many thanks and have a good day out of the wind.

M

BoGoF

What is the WDV brought forward? Did you get any scrap value?

Maharishi

BoGoF said:

What is the WDV brought forward? Did you get any scrap value?

WDV unknown but it's either £1039.88 (4 years) or £852.70 (5 years).  I would need to go and look at the years I claimed for to be 100% certain.  Scrap value will be £40 maximum from our local yard.

[Deleted User]

Maharishi said:

BoGoF said:

What is the WDV brought forward? Did you get any scrap value?

WDV unknown but it's either £1039.88 (4 years) or £852.70 (5 years).  I would need to go and look at the years I claimed for to be 100% certain.  Scrap value will be £40 maximum from our local yard.

You would claim it in the same way as you have done previously. While it is strictly a balancing allowance as opposed to capital allowances it amounts to the same thing. In your case, £999 or £813, less any private element. 

Maharishi

[Deleted User] said:

Maharishi said:

BoGoF said:

What is the WDV brought forward? Did you get any scrap value?

WDV unknown but it's either £1039.88 (4 years) or £852.70 (5 years).  I would need to go and look at the years I claimed for to be 100% certain.  Scrap value will be £40 maximum from our local yard.

You would claim it in the same way as you have done previously. While it is strictly a balancing allowance as opposed to capital allowances it amounts to the same thing. In your case, £999 or £813, less any private element. 

There is no private element as 100% business always.  So just to be clear; I claim the residual value at the point of scrapping as part of the pool even though it's obviously more than 18%?
Sorry to be dense.

[Deleted User]

Maharishi said:

[Deleted User] said:

Maharishi said:

BoGoF said:

What is the WDV brought forward? Did you get any scrap value?

WDV unknown but it's either £1039.88 (4 years) or £852.70 (5 years).  I would need to go and look at the years I claimed for to be 100% certain.  Scrap value will be £40 maximum from our local yard.

You would claim it in the same way as you have done previously. While it is strictly a balancing allowance as opposed to capital allowances it amounts to the same thing. In your case, £999 or £813, less any private element. 

There is no private element as 100% business always.  So just to be clear; I claim the residual value at the point of scrapping as part of the pool even though it's obviously more than 18%?
Sorry to be dense.

You do - less the £40 that you mentioned. 

Maharishi

[Deleted User] said:

Maharishi said:

[Deleted User] said:

Maharishi said:

BoGoF said:

What is the WDV brought forward? Did you get any scrap value?

WDV unknown but it's either £1039.88 (4 years) or £852.70 (5 years).  I would need to go and look at the years I claimed for to be 100% certain.  Scrap value will be £40 maximum from our local yard.

You would claim it in the same way as you have done previously. While it is strictly a balancing allowance as opposed to capital allowances it amounts to the same thing. In your case, £999 or £813, less any private element. 

There is no private element as 100% business always.  So just to be clear; I claim the residual value at the point of scrapping as part of the pool even though it's obviously more than 18%?
Sorry to be dense.

You do - less the £40 that you mentioned. 

Great.  And then, moving forward, I claim any hire charges (and fuel) as normal motoring expenses?
Thanks very much.

Jeremy535897

The first question is whether you use the cash basis. I assume not, as otherwise you would have no pool brought forward.
On that basis, as the van won't be in a special pool, the mere fact that it is the sole asset left is irrelevant: you deduct the £40 or whatever the scrap value is from the pool brought forward, and claim WDA if you need it on the balance.
See: https://www.gov.uk/government/publications/capital-allowances-and-balancing-charges-hs252-self-assessment-helpsheet/hs252-capital-allowances-and-balancing-charges-2021
"You take balancing allowances off your taxable profits. You only get a balancing allowance in the main or special rate pool when you stop your business. You can get a balancing allowance in a single asset pool when you sell or dispose of the asset that is in it."
However, assuming the balance in the pool is £1,000 or less, you can claim the balance whenever you like.
"You can write off all the balance in your main pool or the special rate pool when your pool’s value is £1,000 or less before you work out the WDA. This is called a small pools allowance. You claim this instead of claiming a WDA."

Maharishi

Jeremy535897 said:

The first question is whether you use the cash basis. I assume not, as otherwise you would have no pool brought forward.
On that basis, as the van won't be in a special pool, the mere fact that it is the sole asset left is irrelevant: you deduct the £40 or whatever the scrap value is from the pool brought forward, and claim WDA if you need it on the balance.
See: https://www.gov.uk/government/publications/capital-allowances-and-balancing-charges-hs252-self-assessment-helpsheet/hs252-capital-allowances-and-balancing-charges-2021
"You take balancing allowances off your taxable profits. You only get a balancing allowance in the main or special rate pool when you stop your business. You can get a balancing allowance in a single asset pool when you sell or dispose of the asset that is in it."
However, assuming the balance in the pool is £1,000 or less, you can claim the balance whenever you like.
"You can write off all the balance in your main pool or the special rate pool when your pool’s value is £1,000 or less before you work out the WDA. This is called a small pools allowance. You claim this instead of claiming a WDA."

Are you saying that Ferro gave me the wrong advice?  This is confusing and, no, I don't use cash basis.  I have always had a pool for the vehicle and other equipment purchases.  I have only claimed my entitled WDA on 4 or 5 of the last 10 trading years due to abysmally low profits which meant that there was no value claiming further allowances when I already had no tax liability.  So, I will have no van but cannot claim the residual value, as a loss, in one go?  My current pool is around £3200 all in, so ...

Thanks - and I did go read the linked document, which further depressed me.

[Deleted User]

Maharishi said:

Jeremy535897 said:

The first question is whether you use the cash basis. I assume not, as otherwise you would have no pool brought forward.
On that basis, as the van won't be in a special pool, the mere fact that it is the sole asset left is irrelevant: you deduct the £40 or whatever the scrap value is from the pool brought forward, and claim WDA if you need it on the balance.
See: https://www.gov.uk/government/publications/capital-allowances-and-balancing-charges-hs252-self-assessment-helpsheet/hs252-capital-allowances-and-balancing-charges-2021
"You take balancing allowances off your taxable profits. You only get a balancing allowance in the main or special rate pool when you stop your business. You can get a balancing allowance in a single asset pool when you sell or dispose of the asset that is in it."
However, assuming the balance in the pool is £1,000 or less, you can claim the balance whenever you like.
"You can write off all the balance in your main pool or the special rate pool when your pool’s value is £1,000 or less before you work out the WDA. This is called a small pools allowance. You claim this instead of claiming a WDA."

Are you saying that Ferro gave me the wrong advice?  This is confusing and, no, I don't use cash basis.  I have always had a pool for the vehicle and other equipment purchases.  I have only claimed my entitled WDA on 4 or 5 of the last 10 trading years due to abysmally low profits which meant that there was no value claiming further allowances when I already had no tax liability.  So, I will have no van but cannot claim the residual value, as a loss, in one go?  My current pool is around £3200 all in, so ...

Thanks - and I did go read the linked document, which further depressed me.

If Jeremy stated that my advice was incorrect it is indeed the case - my apologies. 

It was certainly correct at one time but, other than that, no excuses!

Maharishi

[Deleted User] said:

Maharishi said:

Jeremy535897 said:

The first question is whether you use the cash basis. I assume not, as otherwise you would have no pool brought forward.
On that basis, as the van won't be in a special pool, the mere fact that it is the sole asset left is irrelevant: you deduct the £40 or whatever the scrap value is from the pool brought forward, and claim WDA if you need it on the balance.
See: https://www.gov.uk/government/publications/capital-allowances-and-balancing-charges-hs252-self-assessment-helpsheet/hs252-capital-allowances-and-balancing-charges-2021
"You take balancing allowances off your taxable profits. You only get a balancing allowance in the main or special rate pool when you stop your business. You can get a balancing allowance in a single asset pool when you sell or dispose of the asset that is in it."
However, assuming the balance in the pool is £1,000 or less, you can claim the balance whenever you like.
"You can write off all the balance in your main pool or the special rate pool when your pool’s value is £1,000 or less before you work out the WDA. This is called a small pools allowance. You claim this instead of claiming a WDA."

Are you saying that Ferro gave me the wrong advice?  This is confusing and, no, I don't use cash basis.  I have always had a pool for the vehicle and other equipment purchases.  I have only claimed my entitled WDA on 4 or 5 of the last 10 trading years due to abysmally low profits which meant that there was no value claiming further allowances when I already had no tax liability.  So, I will have no van but cannot claim the residual value, as a loss, in one go?  My current pool is around £3200 all in, so ...

Thanks - and I did go read the linked document, which further depressed me.

If Jeremy stated that my advice was incorrect it is indeed the case - my apologies. 

It was certainly correct at one time but, other than that, no excuses!

No problem.  I appreciated you trying to assist me.