AIA

Morory

HI, I have previously messaged about AIA and had great support. Thanks.
In 2017, husband bought a Citreon Van on finance for Work (Builder) £10,852. For the first year we claimed AIA on the £10k and put the the £852 in a pool and claimed as an expense the following year. I did a straight line depreciation chart over 5 years, just as an asset value for him.
In February this year, he bought a bigger Vivaro van £14,650 and used the Citreon as part exchange, the garage gave him £3,650 for the Citreon, against the depreciation table he has made a loss of £2,137, so this is a trading loss?? Also, there was finance still outstanding on the Citreon to the value of £5,843. So by doing this trade in, it has cost him £7,980. I'm just not sure where this goes on the SA form, I have gone over it and feel it has changed alot. In my mind, I want to add £3,650 to his income as he needs to repay the tax on it and then put the £7,980 in expenses, this seems logical and easy. Can i do this.
We will calim all the £14,650 for AIA on 19/20 accounts too. This i think will result in a big tax return!
All advice gratefully received.
My manangment work accounts are so much easier, we just have depreciation policies on Capital Assets.
The hardest with Hubbys accounts is the huge lose, but he knew and he needed a bigger van as work is very busy.
Thank you

douglasstroud

Hi, first of all as you work in accounts you should be aware that depreciation has no impact what so ever on Capital Allowances and the tax calculations, depreciation is purely for bookkeeping purposes.

I take it that the £10,852 for the first van is the only the Capital element of the finance agreement as it is only this that you can claim AIA on, with the monthly interest charge being claimed as an expense through the P&L.
What happens now is that £3,650 that was received for the old van is the disposal proceeds and then you can claim AIA for the cost of the new van (only the Capital element), so if £14,650 is the Capital cost of the van which you can claim AIA on minus the disposal proceeds will give you the amount you can claim, nothing else is needed

I have based the above on the finance arrangement being a HP agreement

Morory

Hi, yes there is no depreciation in the accounts. I just created a straight line chart to give an idea of the value. The first van was on no Hp and yes I did claim the interest only on this.
That makes perfect sense what you said. I am just so rusty on AIA. We depreciate everything at work until 0 value. We don’t sell any assets.
Thank you.