Help please! Vans in a sole trader business

jayp

A friend of mine runs a small cleaning company and does her own online return as a self employed sole trader. She doesn't keep full accounts - just enters her income and expenditure on the HMRC forms. She happened to mention that she bought a van last year and put the full cost as expenditure on her tax return for 08/09. My first thought was that this was seriously wrong but on reading through help sheet 222 on HMRC's webpage it would appear that this could by classed as the annual investment allowance, so could be all tax deductable. Any advice from AAT's with experiance in tax would be greatly appreciated. :001_smile:

claudialowe

What do you mean by "last year"? If you mean y/ended 05.04.08 then there are no AIA's only capital allowances. In this case the tax return would be wrong, as only 50% FYA would have been available.

If however by "last year" you mean y/e 05.04.09 - then yes there is a full £50,000 AIA available.

If they only complete the 3 line accounts, then all capital allowances are included within the expenses section.

And who says that tax doesn't have to be taxing :001_unsure:

Claudia

jayp

Thanks very much for the reply :001_smile:yes, I meant 08/09 so that's ok then. She had a bank loan for part of the cost - can she claim the interest on the loan?

claudialowe

Yes, that is fine.

Claudia

Julia Crouch

Hi

Just one point not raised that often applies with sole traders.

Claiming all of the AIA only applies if there is no private use of the van. If there is then the amount claimed as AIA must be reduced accordingly.

Julia