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Where Taxpayers and Advisers Meet

Advice needed on accounting van purchase

chrisintheuk
Posts:4
Joined:Fri Feb 10, 2017 10:45 am
Advice needed on accounting van purchase

Postby chrisintheuk » Fri Feb 10, 2017 10:51 am

I am a sole trader currently accounting on a cash basis and using simplified expenses.

I am in a position to buy a van for which I will use cash plus a trade-in of my existing vehicle which I use for both business and personal use. The new van will be a direct replacement of this vehicle and so will also be used for both business and personal use.

I'm struggling to know how to account this and so am looking for some guidance.

I have looked on HMRC website help for cash basis accounting and all I have found is the following which doesn't help much:

"If you buy a car for your business, you can claim the purchase as a capital allowance (but only if you’re not using simplified expenses to work out your business expenses for that vehicle)."

I am thinking then that I can probably claim a portion of the new van cost as an expense based on my split of business/personal usage but not the full purchase value?

Thanks!

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Advice needed on accounting van purchase

Postby bd6759 » Fri Feb 10, 2017 11:30 am

You generally can't claim capital allowances if you are using the cash basis, but you can claim the actual cost. The guidance you quote relates to cars, which are treated differently from vans. (You still claim capital allowance for cars under the cash basis).

You treat as an expense the cost of the new van. However, you also treat as a sales receipt the amount you recieve for the old van. The simplest way to deal with it is to only claim the net cost - the amount you actually pay. You then split the net cost in proportion to the anticipated business/non-business use and only claim the business proportion.

For example, if the new van costs £15,000 and you get a trade in of £5,000, the net amount is £10,000. If your business use is 80%, you claim £8,000 as an expense.

chrisintheuk
Posts:4
Joined:Fri Feb 10, 2017 10:45 am

Re: Advice needed on accounting van purchase

Postby chrisintheuk » Mon Feb 13, 2017 8:50 am

Brilliant, thanks very much for the reply

chrisintheuk
Posts:4
Joined:Fri Feb 10, 2017 10:45 am

Re: Advice needed on accounting van purchase

Postby chrisintheuk » Tue Mar 14, 2017 9:35 pm

So am on the verge of purchasing a van. But have a couple of additional questions....


If i buy a van but keep my existing vehicle with the intent that the van would solely be used for business and the other vehicle for personal, can i then claim the full purchase value of the van as an expense as its use will only be business? (I would obviously still maintain mileage reports as evidence of usage).

In this scenario what happens if i then in the future sell the other vehicle and start to use the van for both personal and business?

Thanks again for any insights

WrightsCM
Posts:2
Joined:Wed Jun 21, 2017 7:08 pm

Re: Advice needed on accounting van purchase

Postby WrightsCM » Wed Jun 21, 2017 7:17 pm

You generally can't claim capital allowances if you are using the cash basis, but you can claim the actual cost. The guidance you quote relates to cars, which are treated differently from vans. (You still claim capital allowance for cars under the cash basis).

You treat as an expense the cost of the new van. However, you also treat as a sales receipt the amount you recieve for the old van. The simplest way to deal with it is to only claim the net cost - the amount you actually pay. You then split the net cost in proportion to the anticipated business/non-business use and only claim the business proportion.

For example, if the new van costs £15,000 and you get a trade in of £5,000, the net amount is £10,000. If your business use is 80%, you claim £8,000 as an expense.
I've been searching for an answer to this very scenario, and am very pleased I found this, so thank you!

One question I still have is this...
Do you account for this expense (as in the example £8000) as a one-off expense in your accounting software for that one year only?
Then just claim the vehicle running costs only through the following years? (I don't claim on a mileage basis)

My issue is understanding the best way to account for the purchase with all this info about Capital Assets, AIA etc... I'm very confused.
I also just departed from my accountant of the last 5yrs as I'm tired of paying him for doing nothing but giving me short unhelpful answers, and filing a self-assessment return each year which I could do myself, hence why I'm here hunter for the answers.

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Advice needed on accounting van purchase

Postby bd6759 » Thu Jun 22, 2017 10:07 pm

I also just departed from my accountant of the last 5yrs as I'm tired of paying him for doing nothing
With respect, it sounds like you still need him if your struggling with my last post.

WrightsCM
Posts:2
Joined:Wed Jun 21, 2017 7:08 pm

Re: Advice needed on accounting van purchase

Postby WrightsCM » Fri Jun 23, 2017 3:33 pm

I also just departed from my accountant of the last 5yrs as I'm tired of paying him for doing nothing
With respect, it sounds like you still need him if your struggling with my last post.
You would have to meet the guy to understand why thats a very bad idea.
However meetings with two new potential accountants are in the works.

I can obviously work out the basics of what you are saying, it's simple maths.
My difficulty is understanding the accounting for the sale of the old vehicle which was claimed as an AIA on purchase in 2014-15 year and how I account for the purchase of the new vehicle in this financial year.

In any case, with some investigating I've found some information which I'll use to test out a new accountant.
Thanks anyway.

Falstaff
Posts:2
Joined:Wed Jan 25, 2017 2:40 pm

Re: Advice needed on accounting van purchase

Postby Falstaff » Thu Jan 31, 2019 7:50 pm

I had the same problem of a useless accountant and had to dump him and have struggled with it myself ever since. I found out later he could have saved me thousands when I had a VAT registered limited company, but SAID AND DID NOTHING.
Sole traders needs proactive accountants who can make us aware of what is possible and give useful advice and answers to questions . Too many expect you to virtually give them the completed figures and just complete the form/submit it. £30/mnth to do what?


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