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The Book-keepers Forum (UK) -> VAT, Payroll & Tax -> Sole Trader tax return where Capital Allowance exceeds Profit made
Post Info TOPIC: Sole Trader tax return where Capital Allowance exceeds Profit made
Lyndsey


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Sole Trader tax return where Capital Allowance exceeds Profit made
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Hi

Just wanted to check what others do in this situation.

One of the tax returns I am doing at the moment, it is the business's 1st year in trading & has made a profit of around £2000. 

He has bought about £1,900 in plant and machinery, which is fully for business use, and a car (pickup truck), which I was classing as a "car" and doing the 8% WDA with 20% personal use.

Car was bought for £6500, 80% personal use = £5,200, with a WDA of 8% = £416

So the total Capital Allowance is £2316

This exceeds the profit made for the year. I guess it is reasonable as there are a lot of set up costs in the first year of trading.

When I put transfer these figures from VT+ to TaxCalc it is giving me a loss of £1. Is this correct and a default setting or should this figure be £0? I am a bit new to the software and everything I have done previously has gone through pretty simply.

Thanks for any help (sorry if I am bombarding the forum with q's, it is my first proper year doing tax returns and I want to make sure I am doing everything correctly)



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FoxAccountancyServices


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If his total income is below his personal allowance, save capital allowances for next year. But you wont get AIA then, tho... just normal WDA



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Lyndsey


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Ah thanks, I did read somewhere about that, but it was never covered in any of the exams I have done!

So if it don't claim any allowances, will I only be able to claim for the WDA on the vehicle or can I put the value of the plant & mach into the General Pool a/c and WDA of 18%.



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FoxAccountancyServices


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You can claim any capital allowances for this year, next year at 18%

Anything purchased next year can be treated as normal

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