Hi everyone, I really need some advise, but first of all i will introduce myself!
Im finally starting out! i have been book keeping for my husbands building business for 8 years or so now (is Ltd so goes to an Accountant for final accounts), and been helping the odd soletrader friend for free I had done my BK exams back in 2004 but as i was 'employed' by my better half and not charging my friends I didnt continue my membership....little did i know that would mean my qualifications would lapse. So when i left my other full time job (insurance) 2 years ago to start a book keeping practice i had to retake my exams which i have now done!
Now to the request for help - I have just taken on my first 'official' client who was panicked that he needed to get his SA done my monday. Bless him, after an hours meeting i realised that he had got confused with dates. He registered as a Self Employed Driving Instructor on the 3rd April 2010 so therefore only 3 days of the year is applicable! All the receipts he had collected for me are 99% for the current year that hasnt finished yet!
sorry for the explanation, i just wanted to set the scene.
My question is:
He bought a dual controlled Car on 29th April 2009 in preperation for starting his business but didnt get round to start trading till the 3rd April 2010. The car only cost £3250. In a normal situation i understand this would be 100% AIA.
Based on this information how much can i put through for the 2009-2010 tax year and how much can be carried forward to the 2010-2011 tax year?
Would really appreciate a response before Monday if anyone can help or direct me to a webpage that can!
I assume you mean 29th March for the car purchase.
All of it would be allowable under AIA but as he was only s/e for 3 days, the AIA would be reduced to 3/365ths of £50,000, and so it would depend how much of his expenditure then fitted into that.
Revised AIA would be £410.95. The balance of expenditure over that would qualify for WDA as I understand it, and the rest would be carried forward.
Edited: as previous answer ignored some relevant facts!!
-- Edited by BudgetB on Thursday 27th of January 2011 01:42:48 PM
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Jenny
Responses are my opinion based on the information provided. All information should be thoroughly checked before being relied on.
No..I did mean the 29th April 2009. So effectively he bought it almost a year before officially registering (due to various personal reasons delaying his actual start) but was in the same tax year.
Restricted AIA - I had thought that but wanted to double check, thanks. Seems a shame he loses out on the 100% just because of a few days and can only claim the 20% WDA each year on the remaining balance, was hoping i was wrong and could just delay it and put all of it through this year!
His income for the 3 days is only £82, so am assuming the nett loss will just be carried over to reduce the Profit this year.
So when you say he started trading on 3rd April 2010 do you mean that's the day his self employment registration started or the day he saw his first client? If the registration started earlier then the calculation would be bigger than 3/365ths. It doesn't matter whether he's seen his first client as trying to get business counts as trading.
You don't have to claim capital allowances, you can leave them until the next year, what I'm not sure of is if you delay it would the AIA still count even though it wasn't the year of purchase.
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Jenny
Responses are my opinion based on the information provided. All information should be thoroughly checked before being relied on.
Jenny, I was toying with that one! I think you can only get AIA in the year of purchase - if you waive, then it's going to be WDA in following years. Thing is, it's going to take a while to chip away at £3,250, especially now the WDA rate is going down to 18%.
Would buying a car with dual controls be sufficient to count as start of trading?? That was the intention, presumably it's not a hobby!
Unfortunately his registration with the HMRC is the 3rd April 2010, although i will get him to double check this.
I agree with you, the fact he bought his car a year earlier means that his intention was to start trading then.....he just didnt start earning till the 3rd. Although because he was in full time employment elsewhere (until 30th May 2010) I guess he didnt register with the Inland Revenue until he actually needed to.
Im assuming though that wouldnt be a good enough explanation. And would look odd if i put through such a huge loss on only 3 days of being registered!
