I have a client who is a sole trader and has bought a van and a motorbike for his business. He doesn't use them for personal use, he has his own car for that.
Am I right in thinking that the van can be claimed 100% as a capital allowance as part of AIA as it's commercial but the motorbike is treated as a car so WDA of 20%?
Also, how to I input these figures into Sage? I've never put in capital allowances before so I'm a bit stumped as to what to actually input where. If I put it in as a purchase with a capital nominal code, then where/ how do I show the allowances?
Also, if I have claimed the capital allowances, do I then have to depreciate the asset in following years too or is it either/ or?
The two things are separate are they not? The depreciation figure is for your clients accounts, the capital allowances figure is for tax purposes only and doesn't come into the accounts. Basically two different sets of figures.
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Right, so you are saying that the capital allowances do not get put into Sage? That would explain why I can't work out how to do it then! Thank you for answering that one. I assume that I do that calculation totally separately to go in the SA tax return then? And I take it that I still depreciate in following years?
My other question still stands: Am I right in thinking that the van can be claimed 100% as a capital allowance as part of AIA as it's commercial but the motorbike is treated as a car so WDA of 20%?
A motor cycle purchased after 6th April 2009 is not treated as a car for P&M allowances
Extract:
Motor cycles are specifically included in the definition of a car for capital allowances purposes where the expenditure was incurred before 1 or 6 April 2009. Expenditure incurred on a motor cycle after these dates is not treated as being on the provision of a car. A motor cycle is defined (in the Road Traffic Act of 1988) as a mechanically propelled vehicle, other than an invalid carriage, with less than four wheels. The unladen weight must not be more than 410 kilograms.
Further to your tax computation, and I'm sure you know this, but you start with the P & L figure and then add back certain things, always depreciation, and often other amounts, personal motoring, some legal expenses, entertainment etc. You then would deduct the capital allowances from this figure.
Thanks Rob, I am always open to advice. I did know about adding back non-allowable expenses and depreciation but didn't realise I took the capital allowances off afterwards. I may well have taken the allowances off the profit and loss figure in error so thank you for clarifying that.
