Capital allowances on vans?

Sarah-Lou

I cannot find anything on this, plenty of info on capital allowances for cars but it just says vans are different!

Client considering buying a van and I need to explain what allowances there are and quite simply I don't know!

Help!

Thank you

Sarah-Lou

jilt

Sarah-Lou, I think this will help you

http://blog.taxassist.co.uk/tax-blog/2010/8/9/capital-allowances-on-a-new-van.html

Sarah-Lou

Thank you! Why can I never find these things!

leonag

A van is classed as plant and machinery, so AIA is available, the only thing i would make sure your client is aware of is, in the year of sale of the van, tax (under balancing charges) is payable unless he has other capital allowances that year that out number the disposal price of the van. I've just had this with a client who wanted to sell his van and buy an estate car. He's now decided against this as he would have had tax to pay on balancing charges as the capital allowances available on a car each year are less than he would have sold the van for.

Leona

Sarah-Lou

Thank you Leonag I thought the balancing charge was on expensive cars I didn't realise it covered vans as well. Best get reading up on it!

leonag

Yes although because of the AIA no WDV was entered into the main pool, any disposal value would be entered against the main pool, and then the rest of the computation would be worked just the same as usual.

Forexample if a van was purchased for £12000 in nov 2010, AIA for£12000 could be claimed (providing he wasn't already over the AIA limit) no WDV would be entered into the main pool. If the van was then then sold for £8000 in may 2011 a negative value of £8000 would be entered against the main pool. If there is more than £8000 in capital allowances to be claimed that year the difference between the £8000 and that amount can be claimed, if less than £8000to be claimed the difference between that amount and £8000 would be a balancing charge for the year and tax due on it.

Leona

KaelaH

Just out if interest, is there a limit to how old the asset can be for balancing charges on the sale to be declared? Not sure if that makes sense but what I'm trying to ask is if a client claimed AIA on van in 2009/2010 then decided to sell van in 3 years then would he still have to declare balancing charges? How about if it was 5 years old and fully written down in balance sheet? Apologies for 20 questions, just trying to straighten this out in my head

Monsoon

KaelaH wrote: »

Just out if interest, is there a limit to how old the asset can be for balancing charges on the sale to be declared? Not sure if that makes sense but what I'm trying to ask is if a client claimed AIA on van in 2009/2010 then decided to sell van in 3 years then would he still have to declare balancing charges? How about if it was 5 years old and fully written down in balance sheet? Apologies for 20 questions, just trying to straighten this out in my head

No time limit, balancing charges still apply. Forget depreciation, capital allowances has its own set of rules.

KaelaH

Thank you, makes sense now