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bigduckontax, Accountant
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I am taxi driver how do I show in my accounts that I sold

Customer Question

hi
I am taxi driver how do I show in my accounts that I sold my car for 2000 and bought anew one for 4000 .how does this work in capital allowances
thanks ahmed
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.

Hello Ahmed, I am Keith, one of the experts on Just Answer, and happy to help you with your question.

Assuming that these vehicles are both taxis used wholly and exclusively for your business then they pass through the Capital Alowance (CA) regime. The sale of the old one for 2K creates a balancing charge in the CA account in the year of sale for this amount.

The new car has no entitlement to Annual Investment Allowance only a Writing Down Allowance of 18% annually [8% for cars with CO2 emissions of more than 130g/km] (say GBP 720), but you also have a balancing charge of 2K so your net CA will be a negative GBP 1280 to be added to your trading profits for Income Tax purposes.

I always show CAs as a separate box below the main tax computation as the system is entirely separate from the routine profit calculation where you add back depreciation if included in your accounts and deduct [or, in this year, add] CAs.

I do hope I have helped you with your tax position.

Customer: replied 2 years ago.

thanks keith but how would it be shown calculation wise in the capital allowances

thanks

ahmed

Expert:  bigduckontax replied 2 years ago.

For example:

Capital Allowancea

Motor cars

Acquired 4000

WDA @ 18% 720

Sold 2000 balancing charge

Total CA -1280

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Expert:  bigduckontax replied 2 years ago.
Thank you fot your support.

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