Question on assets owned before self employment

missmel

Hi, I have been asked to do a tax return for a sub-contractor but my knowledge of Pools is a bit rusty and I would appreciate some advise or be advised where to look for answers to the following questions:

Background: Mr P went self employed last May, he travels to/from work in his 4x4 that he owned prior to Self Employment, also he already had a Sat Nav & a printer/computer that are now used for his work.

Q1 - Do I treat the Car as an asset at its current NBV and use 18% WDA?

Q2 - Mr P suggested a price and that seems fair via Autotrader - is this acceptable?

Q3 - Sat Nav & computer/printer are very low value have put in as a general pool again at 18%

I have made an allowance for private use but is there anything else I should check?

Many Thanks for any help received!

T.C.

Firstly travel to and from work is not a business expense and not allowable. Only expenses incurred during the business activity are allowable. If he uses the vehicle for his work, then he can claim a proportion of the value as brought into the business as CA or AIA. Don't forget to proportion the CA on the vehicle with private use. The printer etc are of lower value, so I would include as AIA. I hope that helps.

missmel

To and from work is not allowable? I thought that was only employees or permanent place of work - ie commuting.
Maybe I worded that badly; he leaves home to go to the job / contract he is working on that day /week.

I have made an allowance of personal use.

But how do you value the vehicle? Now an accountant (ACCA) has said to use the list price less 25% RB down to the age the vehicle is now. So is this better than a current value at business start up?

T.C.

Motor expenses - yes they are allowable if the client if working in different places and travelling around. If he was, for instance a shop-keeper, and went to the same place every day, then this would be disallowable. Hope that makes sense!
You could reduce the balance of the vehicle in that way, but there is nothing wrong with using the book value for the accounts.

deanshepherd

T.C. wrote: »

If he uses the vehicle for his work, then he can claim a proportion of the value as brought into the business as CA or AIA. Don't forget to proportion the CA on the vehicle with private use. The printer etc are of lower value, so I would include as AIA.

You can't claim AIA on assets introduced by the proprietor.

deanshepherd

missmel wrote: »

But how do you value the vehicle? Now an accountant (ACCA) has said to use the list price less 25% RB down to the age the vehicle is now. So is this better than a current value at business start up?

The value of a vehicle is entirely subjective unless you sell. Any reasonable valuation method will be accepted by HMRC.

missmel

deanshepherd wrote: »

The value of a vehicle is entirely subjective unless you sell. Any reasonable valuation method will be accepted by HMRC.

Thanks for this.