Need help with self assesment tax return, new to all this

[raulaco]

Hi everybody I could really do with some help with my self assesment tax return. I have tried to ring hmrc but cant get through to anybody.
Anyway I'm just confused between the 2 sections online regarding the AIA Annual Investment Allowance and the allowable expenses.

I am self employed and solely own a small business at the moment and use cash basis I gather and wonder what comes under what,what I think is shown below but not at all sure. Go easy on me as its my first return. Could someone help me please as I dont want to get it wrong. These are all the expenses I use for my small business.

Allowable expenses
phone
van petrol
business insurance
van insurance
website/advertising cost?
printing and stationary expense
stock/materials including work clothing?

Are the above correct?

Now do I use AIA if i use cash basis on the filling the form in online as I purchased a van for business and a laptop for business or do these go into allowable expenses along with everything else.

AIA
Cost of Van
Cost of Laptop

Please help me put these into the right section.
Thank you

[RMC]

1. In you don’t use the van predominantly for business, claim only business use percentage of capital allowances, fuel, repairs, insurance, Road Tax etc.
2. You can claim up to £500 of interest, even non-business interest such as on mortgage or personal loans.
3. You can claim a deduction for business use of home. For example you work at home 25 hours per month, you can claim a flat-rate deduction of £120.

See HMRC helpsheet HS222 How to calculate your taxable profits (2015).

There is a separate section for capital allowances on tax returns incl. online. Why not follow instructions?

[bd6759]

If you use the cash basis, all your cost go through as expenses, including capital costs such as the van and laptop. You do not claim capital allowances (such as AIA). You will need to reduce the costs by an estimated proportion for non business use.

The £500 interest must be paid in respect of a loan used for a business purpose. You cannot take out a loan for a holiday and claim the interest.

If you need more information, try here

http://www.hmrc.gov.uk/manuals/bimmanual/BIM70000.htm

[RMC]

A deduction of up to £500 interest is allowable even if not incurred wholly and exclusively (or at all) for trading purposes – see Finance Act 2013 Sch 5 or the link in the previous reply.

[bd6759]

A deduction of up to £500 interest is allowable even if not incurred wholly and exclusively (or at all) for trading purposes – see Finance Act 2013 Sch 5 or the link in the previous reply.

You have added the "(or at all)" bit in yourself. s51B(1)(b) ITTOIA describes a scenario where (in the absence of S51A which generally disallows interest) interest would normally be disallowed as an expense "because (and only because) it was not an expense incurred wholly and exclusively for the purposes of the trade"

There must be some business purpose, even it is isn't the sole purpose. Other would it would not need to say "wholly and exclusively" and simply say "...not an expense incurred for the purpose of the trade."

Where there is a business purpose, there is no need to to look for an apportionment, and it can be allowed in full up to £500.

[RMC]

1. One could argue that interest not incurred for business purposes is not incurred wholly and exclusively for business purposes.
2. Mortgage interest in normally incurred partially for business purposes - most self-employed do some work at home.