Sole Trader - Car Finance

NATASHA1NATASHA1 Just JoinedRegistered Posts: 1
A really stupid question but I am unable to think of the answer.

I have a new sole trader client who purchased a car through an advance purchase plan which has now ended with a remaining balance of £18,211.00. He has decided to pay in full for the outstanding balance from his personal account. He has also been claiming capital allowances for this vehicle with a wdv of £37,357. He uses the vehicle 25% of the time for private use.

I would be very grateful if someone could tell me how I account for this expenditure of £18,211.00 to purchase the car outright in his accounts and also do I continue to write down the vehicle yearly at 20% (restricted to a max of £3,000 less £750 private use) or a suitable alternative bearing in mind he is not selling the car.

Thank you very much

Comments

  • T.C.T.C. Experienced Mentor Registered, Tutor Posts: 1,448
    As he is not selling the car, you would continue with the capital allowances as you have been. You will simply put in the payment as a capital introduction to the business in order to pay off the finance. Does that make sense?
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