Self employed offset van purchase

smellogs

Husband is semi retired but needed new van. Sub contractor using cis. Has used simple expenses up to purchasing new van. Has changed to cash basis, so can claim van cost as expense. If the cost of the van exceeds his profit from self employment, can he use pension income to offset the loss when he completes the self assessment? Also can he still contribute £3600 gross to his pension?

Nomunnofun1

smellogs said:

Husband is semi retired but needed new van. Sub contractor using cis. Has used simple expenses up to purchasing new van. Has changed to cash basis, so can claim van cost as expense. If the cost of the van exceeds his profit from self employment, can he use pension income to offset the loss when he completes the self assessment? Also can he still contribute £3600 gross to his pension?

He can offset the loss against his other income. No issue with the contribution of £2880 net, £3600 gross. 

DullGreyGuy

Nomunnofun1 said:

smellogs said:

Husband is semi retired but needed new van. Sub contractor using cis. Has used simple expenses up to purchasing new van. Has changed to cash basis, so can claim van cost as expense. If the cost of the van exceeds his profit from self employment, can he use pension income to offset the loss when he completes the self assessment? Also can he still contribute £3600 gross to his pension?

He can offset the loss against his other income. No issue with the contribution of £2880 net, £3600 gross. 

No, they can't offset from other income because they are using cash accounting

Nomunnofun1

DullGreyGuy said:

Nomunnofun1 said:

smellogs said:

Husband is semi retired but needed new van. Sub contractor using cis. Has used simple expenses up to purchasing new van. Has changed to cash basis, so can claim van cost as expense. If the cost of the van exceeds his profit from self employment, can he use pension income to offset the loss when he completes the self assessment? Also can he still contribute £3600 gross to his pension?

He can offset the loss against his other income. No issue with the contribution of £2880 net, £3600 gross. 

No, they can't offset from other income because they are using cash accounting

From 6th April 2024?

https://www.gov.uk/government/publications/expanding-the-income-tax-cash-basis-for-self-employed-individuals-and-partnerships/expanding-the-cash-basis#who-is-likely-to-be-affected



This measure removes this restriction, allowing cash basis losses to be used in the same way as accruals basis losses. This means that cash basis losses will be able to be set sideways against general income of the same period, or carried back to earlier years, subject to the same general loss relief rules as accruals losses.