Offset PCP deposit against income.
Discussion
Just a quick one really guys!
Just been chatting to an old colleague of mine who just recently went self employed.
He paid a deposit on a pcp deal for a new van Jan 2023 but didn’t take delivery until June 2023.
He decided he was also going to do his tax returns but after several days, gave up and gave all the paper work to a local accountant who is doing it all for him.
However, he was under the impression that the deposit for his van would come out of his 22/23 financial year but the accountant has said it would go forward to his 23/24 financial year due to him not having taken delivery if the van until June.
Now, me being totally clueless, would assume the deposit should come out of his 22/23 financial year as that is when he paid the money, even though the van wasn’t delivered until June?
Just been chatting to an old colleague of mine who just recently went self employed.
He paid a deposit on a pcp deal for a new van Jan 2023 but didn’t take delivery until June 2023.
He decided he was also going to do his tax returns but after several days, gave up and gave all the paper work to a local accountant who is doing it all for him.
However, he was under the impression that the deposit for his van would come out of his 22/23 financial year but the accountant has said it would go forward to his 23/24 financial year due to him not having taken delivery if the van until June.
Now, me being totally clueless, would assume the deposit should come out of his 22/23 financial year as that is when he paid the money, even though the van wasn’t delivered until June?
I gueas it would depend if he was cash accounting or standard accounting.
But, if he is doing standard accounting then the transaction is not technically conplete until there is a transfer of ownership. In this case he had not taken delivery, so transaction had not completed, he had only paid a deposit.
BUT, before March 23 there was a auper deduction for capital allowances giving you 130% deduction. So id maybe pick this up with the accountant as there was a busineaa decision and action taken to purchase before the 31st march deadline. Worth a chat with the accountant.
Another BUT, depending on the size of the business he could pay 25% tax instead of 19%. So having such a large expense in the following year could be more beneficial. Again, worth a chat.
But, if he is doing standard accounting then the transaction is not technically conplete until there is a transfer of ownership. In this case he had not taken delivery, so transaction had not completed, he had only paid a deposit.
BUT, before March 23 there was a auper deduction for capital allowances giving you 130% deduction. So id maybe pick this up with the accountant as there was a busineaa decision and action taken to purchase before the 31st march deadline. Worth a chat with the accountant.
Another BUT, depending on the size of the business he could pay 25% tax instead of 19%. So having such a large expense in the following year could be more beneficial. Again, worth a chat.
Gassing Station | Finance | Top of Page | What's New | My Stuff