Help needed - confused

Janej

Hi
I am getting myself a bit confused. I have a new client who is a subbie working in construction therefore the majority of his income has been subject to 20% CIS at source.
He has given me his figures for last financial year which show an income of £21000 with expenses of £8000. Up until Jan this year he had a car he used exclusively for work and claimed running costs on this (fuel, insurance tax etc) He has never claimed capital allowances on the car just running costs. In Jan he disposed of the car and bought a van for £3500 and over the course of the year he has bought tools to the value of £700. Am I right in thinking he can claim 100% of the total cost of the car and the tools as AIA ???? Or do I just treat the tools as a one off expense and claim AIA on the van.

If this is the case then it would reduce his net profit to just over the personal allowance amount, does this mean that he will get a refund of the difference paid through CIS and the amount of tax due on his net profit less personal allowance ???? If so he is going to be well pleased!! :001_smile:

I am probably sounding a bit thick here but I just didnt want to give him duff info as its the first SA I have done for a sub contractor where AIA comes into play.
I think I am suffering from a lack of confidence on this one.
Thanks
Jane

RAS

I would claim AIA on the tools and van and probably ignore the car, depending on amounts involved. One thing to watch out for when claiming AIAs on vans, the client is pleased when they can claim 100% AIA on the purchase but not so impressed when there is a balancing charge if they then sell it a year or two down the line.

Sounds like he will get a healthy refund this year. I would explain to him that next year any refund probably will not be as high. Have you got CIS statements from the main contractors as CIS will have only been deducted from the labour element and not any materials involved.

Janej

Thanks RAS
I will explain it to him, he is a new client to me and he knows that he will be due a refund due to the CIS being deducted as in previous years. I do have all the CIS monthly statements and its all labour only and no materials involved so no problems there. I presume he can he still claim running costs for the car for April 12 to Jan 13.
Jane

villapb

The car i would used the mileage allowance ..................

T.C.

All good advice. I always try to get my clients to take capital allowances on vans - it is definitely a shock if not when they have balancing charges further down the line. AIA on tools etc is good though.