I've completed my nephews SA for the last couple of years. He didn't earn a lot but was taxed by the contractor @ 20% so any tax he paid was refunded by HMRC. (i fully understand this)
This year he has earned a lot more but also has quite a lot of expenses. He has mentioned to me that if his expenses are as much as his tax then he gets the tax refunded. Has anyone heard of this? I a not sure I understand what he is saying.
Also he has purchased a van for his job £1750.00 and has asked if he can reclaim the full amount rather than depreciating the van each year reducing balance. Can this be done and just treated as a normal expense?
Ignoring personal allowances, your nephew would need his business expenses to match his income, not any tax deducted, for all of the CIS tax to be repaid. Maybe he's just getting confused on this point?
If your nephew intends to use the van for a number of years, then it should be treated as a fixed asset. However, he could claim the annual investment allowance so he'll get 100% tax relief on the van in the year of purchase.
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Pearce & Co - Chartered Accountant and Chartered Tax Adviser
Thanks for the reply Robert. I think he was wanting to use the full £1750.00 but I have tried to persuade him to keep it as a fixed asset and just put the depreciation through as an expense.
I'll just put his earnings and expenses through and see what the calculation comes up with.
Depreciation is not a tax deductable expense - it has to be added back for tax purposes.
If you don't want to claim AIA, you can add the van to the "pool" and claim the reduced amount of capital allowance allowed. You can also restrict the amount of AIA - it does not have to be claimed up to the maximum. Any balance is put in the "pool".
Can you claim any part of mobile phone charges if you are on pay as you go?
I have just submitted my nephews return for him but haven't put through any mobile charges as he hasn't really got any evidence how much the charges are.
