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Ask Your Own Question, Chartered Certified Accountant
Category: Tax
Satisfied Customers: 7054
Experience:  FCCA - over 40 years experience as a qualified accountant (UK based Practitioner)
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I've just set up a driving school business as a sole trader,

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Hi, I've just set up a driving school business as a sole trader, and I am just about to register with HMRC for tax and NI purposes. My first lesson for payment was on 4/4/19, but I spent a good deal prior to my first 'trade' on training costs, Getting a car and loan, dual controls, advertising etc. What is the date I should say I've started my business so that these costs can be claimed against tax? Is it when I started my training many months back or when I actually had my first piece of business, i.e. A payment for a lesson?
JA: Have you talked to a tax professional about this?
Customer: No, I've not, I've kept records, receipts and thought it was high time I registered so I can keep everything straight, and thought,when am I considered to have started my business, when I started training, i.e. Paying out to set my self out, or when I started advertising and got my first piece of business?
JA: Anything else you want the Accountant to know before I connect you?
Customer: No thank you

Hello and welcome to JustAnswer. I am here to help you. I am reviewing your question and will respond to you shortly.
Many thanks

Customer: replied 1 year ago.
Customer: replied 1 year ago.
No thanks re the offer of a call to discuss

Thank you for your question.

Your first payment received was in the tax year ended 5 Apr 2019. Expenses incurred wholly and exclusively for the purpose of business would be tax allowable. These would include capital cost of the car, interest on car loan, modification to the car, advertising etc.

Unless you already have training as a driving instructor, expenses to learn a new skill would not be tax deductible, I'm afraid.

Your first set of accounts would show a loss as income would be marginal compared to expenditure incurred.

I would use business start date as when you first incurred expenditure pertaining to driving school.

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 1 year ago.
Thank you. I first incurred cost in the training as an instructor which was undertaken solely to prepare myself to be able to 'open for business'. As this is wholly a cost to allow me to trade in this function, is this not a tax deductible training cost? Similarly the cost of the three exams which have to be undertaken, are they expenditure which is tax deductable?

Thank you for your reply.

The training as an instructor would not be allowable as it is acquisition of a new skill (just as my expenditure in training to become an accountant). The exams could be agrued to be continued professional development if they were taken after the training and not integral part of training.

I hope this is helpful and answers your question.

Customer: replied 1 year ago.
Thanks, understood.
The vehicle which I am purchasing on HP for the driving tuition. I made a deposit payment from my own funds for this and pay a monthly fee over the next 4 years in order to have then purchased the vehicle outright. This vehicle is used wholly in the course of business as I have my own vehicle for private use. I take it that my initial deposit payment and all of the monthly up payments are tax deductable as well as the fitting of the dual control costs?

Thank you for your reply.

Purchase of vehicle on HP is a business expense. The cost of vehicle is capital (fixed assets) and interest within the HP payments is profit and loss expense and allowable against the profit.

The intial deposit and monthly payments are balance sheet items and not deductible against profit. Instead, you claim capital allowance for the vehicle and this reduces your taxable profits.

Cost of fitting dual control is allowable expense.

I hope this ishelpful and answers your question.

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