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Where Taxpayers and Advisers Meet

Which Bank account - Personal or Business?

smithy74
Posts:6
Joined:Tue Jan 25, 2022 9:02 pm
Which Bank account - Personal or Business?

Postby smithy74 » Thu Jun 22, 2023 10:08 am

Hi All,
I use my van for business use only. At the beginning of the year whilst my van was under my Breadown Recovery Company, my van got damaged. I got a quote from a car body company to have the damage repaired. Yesterday, after nearly 6 months of waiting, the Breakdown Company asked me for my bank details to pay for the damage that was incurred.
My query is.... does this payment from the Breakdown Company go into my business bank or my personal account? Or, does it depend if the payment is used to have the van repaired or not repaired?
Thanks in advance for any replies i receive.
Best regards

pawncob
Posts:5083
Joined:Wed Aug 06, 2008 4:06 pm
Location:West Sussex

Re: Which Bank account - Personal or Business?

Postby pawncob » Thu Jun 22, 2023 10:53 am

Presumably the repairs were (will be) paid from the business account, so that's where the refund goes.
With a pinch of salt take what I say, but don't exceed your RDA

smithy74
Posts:6
Joined:Tue Jan 25, 2022 9:02 pm

Re: Which Bank account - Personal or Business?

Postby smithy74 » Thu Jun 22, 2023 1:45 pm

Thanks. What if I decide to just take the money and not bother having the van repaired? I guess its my choice, so is the money then pkay to go into my non business account? The van has done very high mileage so I'm wondering whether to bother. However I am still entitled to be reimbursed by the Breakdown Company as they damaged my van..
Thanks again

bd6759
Posts:4239
Joined:Sat Feb 01, 2014 3:26 pm

Re: Which Bank account - Personal or Business?

Postby bd6759 » Thu Jun 22, 2023 4:29 pm

The compensation is a capital receipt. In the circumstances you describe it is not income. Should you choose to repair the van, the allowable expense you could claim in your accounts is reduced by the amount you received.

It does not matter where the money is deposited. The tax treatment follows the nature of the sum, not the account into which it is paid. You should have it paid into your business account. That keeps it nice and tidy and keeps your personal accounts separate from your business dealings. Very important for an HMRC enquiry: if business receipts or expenses go into or come from your personal account, that account becomes a business record. You don’t want that.


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