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Where Taxpayers and Advisers Meet

query capital allowances?

NEWOSA65
Posts: 9
Joined: Fri Aug 05, 2011 9:49 pm

query capital allowances?

Postby NEWOSA65 » Tue Jul 17, 2018 4:56 pm

Hi folks,
I have decided for a change to complete and submit my tax return early!
I submit my own self assessment tax return.
My query is... I bought a commercial vehicle for £12000 and I am presuming that this comes under capital allowances? I checked out box 3.8 on the booklet that came with the tax return and it suggests that if you use cash basis to work out income/expenses then you can only claim capital allowances for 'cars'?? I bought the van for my business so I can only presume that 'cars' covers vans as well??
It could be a silly query but I just need confirmation.
Thanks as always.

AdamS93
Posts: 195
Joined: Tue Sep 26, 2017 6:28 pm

Re: query capital allowances?

Postby AdamS93 » Tue Jul 17, 2018 5:09 pm

No, a car and a van are very different.

You are using the cash basis - you look at cash coming in (sales) and cash going out (purchases) which will include the payment(s) for your van.

Under the cash basis there are also restrictions on the amount of interest you can deduct if some sort of lease/HP.

Most accountants would advise against using the cash basis for the above reasons as well as other reasons especially around losses.

NEWOSA65
Posts: 9
Joined: Fri Aug 05, 2011 9:49 pm

Re: query capital allowances?

Postby NEWOSA65 » Tue Jul 17, 2018 5:44 pm

Thanks Adam - I did pay for the van in full, no monthly payments are required? Does this still not count?
Also the term cash basis i presume means the following:
eg., you buy a piece of furniture for say £250 (paid by cash... or bank transfer, credit card, debit card etc) and sell for £795 (to receive payment for example in cash or card or cheque etc etc)?
Please confirm?
Cheers

AdamS93
Posts: 195
Joined: Tue Sep 26, 2017 6:28 pm

Re: query capital allowances?

Postby AdamS93 » Tue Jul 17, 2018 6:19 pm

Cash means paid for in this instance, however paid.

You deduct the whole £12,000 as an expense then. When you sell it, say for £5,000, the £5,000 is taxable income.

NEWOSA65
Posts: 9
Joined: Fri Aug 05, 2011 9:49 pm

Re: query capital allowances?

Postby NEWOSA65 » Tue Jul 17, 2018 6:43 pm

Okay thanks - so to confirm because I paid for the van in full and filled my short tax return out using Cash Basis, I can list the buying price of £12000 in box 3.8 under Capital Allowances? It was mentioned to me by someone that i could only expect about 1/4 of this back but anything back would be a bonus! Thank you for your time and help, I just needed to make sure as wouldn't to unknowingly break the law.

NEWOSA65
Posts: 9
Joined: Fri Aug 05, 2011 9:49 pm

Re: query capital allowances?

Postby NEWOSA65 » Tue Jul 17, 2018 8:13 pm

Hi again - having re read what you have mentioned it sounds as if I cannot use Capital Allowance for the van (cars only) when using cash basis? I think and please quote me if i am incorrect, that because I paid for the van in full by cash that you are suggesting to treat the £12000 buying price as an ordinary business expense? Please can someone let me know? Many thanks :)

robbob
Posts: 2683
Joined: Wed Aug 06, 2008 4:01 pm

Re: query capital allowances?

Postby robbob » Wed Jul 18, 2018 8:12 am

Hi again - having re read what you have mentioned it sounds as if I cannot use Capital Allowance for the van (cars only) when using cash basis? I think and please quote me if i am incorrect, that because I paid for the van in full by cash that you are suggesting to treat the £12000 buying price as an ordinary business expense? Please can someone let me know? Many thanks
Yes it's as AdamS93 confirmed - you claim the cost as an expense.

https://www.gov.uk/simpler-income-tax-cash-basis
Unlike traditional accounting, you claim other equipment you buy to keep and use in your business as a normal allowable business expense rather than as a capital allowance.

Note a Van is not a car so is treated as equipment.

NEWOSA65
Posts: 9
Joined: Fri Aug 05, 2011 9:49 pm

Re: query capital allowances?

Postby NEWOSA65 » Sun Jul 29, 2018 9:18 pm

Thank you very much for confirming - I can now see how a car and van differ, that is what confused me although an estate car could also be classed as equipment for some businesses I presume? Thanks again :)

AdamS93
Posts: 195
Joined: Tue Sep 26, 2017 6:28 pm

Re: query capital allowances?

Postby AdamS93 » Sun Jul 29, 2018 10:32 pm

No, an estate car is always a car. It has nothing to do with what type of business you run, a car is defined in legislation.

It is dangerous to presume anything when it comes to tax.


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