Help doing my self assessment

[deanbwfc]

Hi, i'm just looking for help doing my online self assessment before 31 Jan, got a few things i'm not sure about.....

I'm a self employed plumber and starting working self employed in May 2010, i've got all my inoices and receipts together and ready to do the tax return. First of all i bought a van in June 2010 (got the invoice) and basically my wealthy uncle paid for it and i pay him back £30 a week, how would i treat this on my return?

After looking through the HMRC notes i understand that i need to try and split how much i use the van for work and how much i use it for private, i would say as an estimate 70% work 30% private. The bigger issue is the mileage i've got all my petrol receipts but i'm not sure how many miles i did per job (i will note this down in future) so i do around 12,000 miles a year, is it acceptable to split the 12,000 miles by 70% and so claim 40p for 8,400 miles for work?

Mobile phone top ups, again i use most of these for work and 70% would be about right, do i claim 70% back as expenses?

The insurance on the van (£90 a month) do i count this as expenses to be claimed back in full?

Within the year i paid in £1,900 from a whip last claim from a couple of years ago, would i count this as income?

Thanks for your help

[King_Maker]

Have you read HMRC's Help Sheet HS222?

[deanbwfc]

I've looked through all the help sheets but still not clear on the issues above

[King_Maker]

The main thing you have to decide is whether to claim business mileage (+ finance costs) assuming your turnover is below the VAT limit, or a % of ALL the motoring costs (less private use) in respect of the van. I suspect the latter will be the better option

Any business assets with private use must be apportioned accordingly.

The whiplash injury monies are not taxable income.

[deanbwfc]

thanks for your reply. Will i claim 70% of the cost of the van as an AIA? eventhough i've not actually paid for it, my uncle did?

[King_Maker]

The van should appear on the Balance Sheet as an asset.

The loan from your uncle should appear on the Balance Sheet as a liability.

Any interest paid to him will appear in the Profit & Loss and be allowable for tax purposes (less 30% private use). Any interest received by your uncle will be taxable.

[deanbwfc]

Now i am confused! I don't plan on doing any balance sheet or profit and loss, i was just going to claim 70% of the cost of the van (£5,180) as an AIA against my income, then claim 70% of the 12,000 miles i roughly do in the year at 40p and claim 70% of the van insurance and any other vehcile costs (van tax, servicing) and claim 70% of phone top ups. Then final claiam 100% of any materials, tools, overalls and stationery which is wholly for my work

Leave out the whip last claim from my income

This correct?

[King_Maker]

No, you cannot mix mileage rates and actual costs. It is one or the other. If you claim the former, you cannot claim AIA - as the mileage rates include depreciation, insurance, repairs etc.
The 45p per business mile for the first 10,000 miles and 25p thereafter is an HMRC concession.

[deanbwfc]

Oh right now i see, thanks. It will will work out better for me if i claim the actual costs

van - £5,180 @ 70% = £3,626
Van insurance £1,200 @ 70% = £840
Van Costs (Tax and servicing) £400 @ 70% = £280

Total van costs = £4,746

Mileage 12,000 @ 70% = 8,400 @ 40p = £3,360

I will use the van costs and then add my other business expenses at 100% to go against my income

[King_Maker]

Mileage is 8400 @ 45p = £3780.

As your first trading period is less than 12 months AIA has to be restricted accordingly = 11/12ths?

The difference in tax terms at 20% is about £140 And less hassle?

Without AIA next year, mileage rate might be the better option. However, you must choose which method and use it consistently.