My client is just starting self employment, and wishes to buy a van.
I understand that he can claim AIA for 100% of the van, but this will be in the tax year 2012/2013, as it will be more effective.
Am I correct in thinking that there is no point whatsoever claiming the AIA on a pro rata basis for the two months that he will be self employed for 2011/2012?
Is it more tax efficient to do a tax return for the two months of this year, based on provisional figures, then do a full set of accounts for 2012/2013, and re submit the return for 2011/2012, making full use of the AIA?
I know that this is probably the best way to do it, but need a way to justify to him my reasons for treating his accounts in this way.
I'm not a tax expert, but I believe AIA can only be claimed in the year of purchase. I have never heard about pro-rating AIA. Also bear in mind that the AIA limit is changing at the end of this tax year. It's £100,000 now, but it will be only £25,000 next year (after April). So depending on how much the van is worth it may be better to claim AIA before the change in the limit occurs.
Hope this helps.
Fabs
__________________
Boomerang Bookkeeping
Fixed-fee Bookkeeping Solutions for Small Businesses from £15 per month.
