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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15950
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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My partner is a sole trader trades man. We have a

Resolved Question:

Hello,
My partner is a sole trader trades man.
We have a new van that was purchased for him by his father for business use.
He gifted us the money and paid it into our account and we then purchased the van.
Can we put this down as an outgoing on the tax return?
If so can you spread it over a few years?
Thank-you.
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi. Your partner won't have to pay tax on the gift but he can claim capital allowances on the cost of the van through his tax return. Take a look here for the options. You could claim it all in one year using the Annual Investment Allowance rules or spread it over several years using the Writing Down Allowance rules. I hope this helps but let me know if you have any further questions.
Customer: replied 2 years ago.
Thank you.
How does this work?
The van cost £25,000 can we put the full amount down as an OUTGOING
Say £5000 for 5 years.
What the difference between capital allowance and an outgoing?
Thanks
Expert:  TonyTax replied 2 years ago.
You cannot claim the cost of the van as an expense. If you sell it, then there will be a clawback of capital allowances as you can never get tax releif for more than the net cost of an asset (purchase price less disposal proceeds or value). That doesn't apply to everyday expenses such as fuel costs or repair costs. If you claimed under the Annual Investment Allowance rules, you wouild put the whole £25,000 less private use through in the appropriate box on the self-employment pages. Look here for more information. If you claimed under the Writing Down Allowance rules, you would claim at the rate of 18% per annum less private use on a reducing balance until the whole cost is written off or you sold the van. Look here for more information.
Customer: replied 2 years ago.
Thanks.
I thinks the Writing Down Allowance rules might work best for us..
You were going to send more information on that ?
We don't use it for private use as we have a car as well.
So do you mean we can put 18% of £25,000 down as an expense for 5 years?
Expert:  TonyTax replied 2 years ago.
I was going to link to an example but I'll do that here:
You claim a WDA of £4,500 in year 1 (£25,000 x 18%), £3,690 in year 2 (£20,500 x 18%), £3,026 in year 3 (£16,810 x 18%) and so on until you have written off the whole cost or sold the van.
Customer: replied 2 years ago.
Ok great thanks.
Sorry but could you write year 4 and 5 amounts as well just so I know what to do when the time comes please.
Expert:  TonyTax replied 2 years ago.
Year 4 £2,481 (£13,784 x 18%). Year 5 £2,035 (£11,303 x 18%). Year 6 £1,668 (£9,635 x 18%). Year 7 £1,434 (£7,967 x 18%). You do this until you have written of the whole cost or sold or disposed of the van.
Customer: replied 2 years ago.
Ok thats great thanks.
So when i submit the tax return I can call it a...
Vehicle expense under the Annual Investment Allowance rules?
Expert:  TonyTax replied 2 years ago.
If you were claiming under AIA, you would be putting £25,000 in the box. You are claiming WDA so you put £4,500 in the capital allowances box, not the AIA box.
Customer: replied 2 years ago.
Ok thanks.
Please could this conversation be emailed to me.
Many thanks for your help.
Do you do online tax returns by any chance?
Expert:  TonyTax replied 2 years ago.
I don't think it can be emailed. What you can do is cut and paste the web page address and put that in an email to yourself.
I do have my own clients but I'm not allowed to take on work through this site.
TonyTax and other Tax Specialists are ready to help you
Customer: replied 2 years ago.
Ok great many thanks for your help.