Delaying business expenses

Cubana48

Hi guys

I won't exceed the lowest tax threshold of £12570 for the 2023/2024 year in income alone, yet I have significant expenses related to materials and day to day running costs of the business including buying a used electric van.

I will earn more in 2024/2025, and again likely even more in the following tax year. Is it possible to delay my expenses to later years to make it more tax efficient, and if so, how long do I have to claim an expense. I have seen conflicting information online.

An example might be some timber purchased for a job for a client. And the other example as mentioned is a used electric van which cost around £16,000 purchased in 2023/2024 year. I have heard you must split this 1/3 over 3 years. Again, what is the time limit on this? Lot of conflicting info online.

Thanks

Grumpy_chap

Do you use cash basis accounting?

Cubana48

Yes I use cash based accounting

Bookworm105

Cubana48 said:

Yes I use cash based accounting

then you must record your expenses when you pay for them - clue in the name 
Cash basis: How to record income and expenses - GOV.UK

Expenses if you're self-employed: Car, van and travel expenses - GOV.UK

Cubana48

Been doing a bit more research.  As I understand it, because I'm using cash based accounting, nothing I can do about the material etc expenses occured during that tax year. I can't defer them.  I earned £11,500, but had £2000 of day to day expenses so my profits were £9500.  £12570 - £9500 = £3070.  Had I earned over the threshold, that's a potential lost relief of 20% of £3070 = £614.  But it is what it is.

I'm just stating that to potentially help others or as a reference for myself.  

But with regards to the van which is a bigger issue, I've heard anecdotely that I have 2 options.

1) I incur it 100% as an expense in the year I bought it (2023/2024), and pass on the losses to the following tax year i.e. £9500 - £16000 = -£6500 loss, which can be applied to 2024 / 2025 tax year.  But of course I've essentially just given up £9500 worth of expenses.

2) Defer it as a Capital allowance to the following tax year as a writing down expense for 2024/2025 and claim 18% (£2880), then 2025/2026 18% (£2361) and so on.  

So in effect, I don't have to do anything for the 2023/2024 submission regarding my van. 

I can also defer any other major capital equipment such as power tools etc to the following tax year to maximise my relief. 

Does that sound right?

Bookworm105

Does that sound right?

read the link already given, paying attention to the difference between a car and a van ... in other words, no