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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4423
Experience:  FCCA FCMA CGMA ACIS
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I am just working on my husbands bookwork who is a self

Customer Question

Hi, I am just working on my husbands bookwork who is a self employed builder (non VAT registered). I am trying to work out how I should claim any capital allowances or AIA on the selling of his old business van and purchasing of his new van.
See details below:
Old van - VW.
7867.74 Balance to clear - VWFS
10000 Paid directly to VWFS by new buyer
2132.26 Refund from VWFS
New van - lease purchase
Deposit 2816.93 (made up of refund from VWFS & £700 cash loan)
Total value of new van inc VAT 27775
Monthly lease payment £249
I would really appreciate any help with this in terms of how I should claim. Should I claim this or just input the new monthly van lease cost?
Thank you
Submitted: 1 year ago.
Category: Tax
Expert:  bigduckontax replied 1 year ago.

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

Vans attract AIA under the capital allowance regime so the purchase price of the new van can be entered as part of the AIA for the relevant accounting year. The old van, if sold, then any surplus made over the capital allowance written value will be a balancing charge and reduce the amount of capital allowances claimed in the same accounting period.

Does that solve your problem?

Customer: replied 1 year ago.
I think so - just a couple of points of clarification pleas.e I saw guidance that if leasing a vehicle then AIA couldn't be used. However are you advising that we should in fact put down the value of the new van as AIA?
Then we need to understand what this figure is to understand if there is a balancing figure to take into account based on the sale of the old van?
Thank you
Expert:  bigduckontax replied 1 year ago.

Correct; if the vehicle is leased then the leasing charge goes through the trading account like any other business expense. You had not mentioned this before. If leased a business expense, if bought then it's a capital allowance item, an AIA.

The balancing charge depends upon the particular capital allowance regime under which the old van was acquired. These have changed over the years and it will probably have received a First Year Allowance (now replaced by the AIA) and successive Writing Down Allowances. The sale price less the current brought forward figure in the capital allowance account would constitute the balancing charge.

I do hope that assists. Please be so kind as to rate me before you leave the Just Answer site.