Self Employment : Balancing charges?
Discussion
Just a quick one as the Tax Return notes don't explain this very well -
If I sell a car used partially (say 30%) for work during the tax year, then is the balancing charge 30% of the value that I sell it for?
Seems a bit much that's all - the writing down allowance for when you buy a car is 25% of the car's value IIRC, so in this case it would be 30% of 25% of the value of the car.
Does the 25% thing apply when selling too?
If I sell a car used partially (say 30%) for work during the tax year, then is the balancing charge 30% of the value that I sell it for?
Seems a bit much that's all - the writing down allowance for when you buy a car is 25% of the car's value IIRC, so in this case it would be 30% of 25% of the value of the car.
Does the 25% thing apply when selling too?
OK, so the writing down allowance / value(?) for the car this year was 790.91 (25% of 3163.64)
I sold it for 2500 - so my balancing charge is (3163.64 - 2500) * 30% (if 30% is my amount of business use).
Or am I getting confused
Sorry, the examples they give are really unclear as to how this works...
>> Edited by NiceCupOfTea on Monday 30th January 01:29
>> Edited by NiceCupOfTea on Monday 30th January 01:29
I sold it for 2500 - so my balancing charge is (3163.64 - 2500) * 30% (if 30% is my amount of business use).
Or am I getting confused
Sorry, the examples they give are really unclear as to how this works...
>> Edited by NiceCupOfTea on Monday 30th January 01:29
>> Edited by NiceCupOfTea on Monday 30th January 01:29
So your WDV brought forward at the beginning of the year is 3163 and you sold the car for 2500?
You ballancing allowance is therefore, 3163 - 2500 = 663 then restricted to 30% so, £221.
You would be charged a ballancing charge if you made a profit on the car, say you had sold it for £4000!
Hope that helps!
In addition, you can then claim a WDV on anything bought to replace it.
>> Edited by Smartie on Monday 30th January 01:34
You ballancing allowance is therefore, 3163 - 2500 = 663 then restricted to 30% so, £221.
You would be charged a ballancing charge if you made a profit on the car, say you had sold it for £4000!
Hope that helps!
In addition, you can then claim a WDV on anything bought to replace it.
>> Edited by Smartie on Monday 30th January 01:34
That's right.
The opening value of £3k should be the written down value, after deducting writing down allowances from previous years, not the original cost.
And thank you for reminding me I'm going to be hit with a penalty for not getting mine done by the 31st.....
swine.....
edited to say I was not responding to Smartie, who pushed in while I was chewing a doughnut....
some buggers have no manners.....
>> Edited by mybrainhurts on Monday 30th January 01:38
The opening value of £3k should be the written down value, after deducting writing down allowances from previous years, not the original cost.
And thank you for reminding me I'm going to be hit with a penalty for not getting mine done by the 31st.....
swine.....
edited to say I was not responding to Smartie, who pushed in while I was chewing a doughnut....
some buggers have no manners.....
>> Edited by mybrainhurts on Monday 30th January 01:38
Guys, that's much clearer and you've saved me a lot of money (was just about to claim 30% of 2500 as my balancing charge 
)
So, to recap:
Work out WDA of new car as per usual (25% of price) *30%
Balancing charge = 663 *30%
Correct?
(no WDA on old car as selling it?)
Smartie, what's the disctinction between the Balancing Charge and the Balancing allowance?
) So, to recap:
Work out WDA of new car as per usual (25% of price) *30%
Balancing charge = 663 *30%
Correct?
(no WDA on old car as selling it?)
Smartie, what's the disctinction between the Balancing Charge and the Balancing allowance?
So in effect, as I made a loss on the car (because I sold it for less than the 3100 supposed value at the start of the year) I add the amount I made a loss by (600 odd quid) to the WDA of the other car? So it's all good!?
(This is always the bit of the tax return I have had problems with
)
(This is always the bit of the tax return I have had problems with
)NiceCupOfTea said:
So in effect, as I made a loss on the car (because I sold it for less than the 3100 supposed value at the start of the year) I add the amount I made a loss by (600 odd quid) to the WDA of the other car? So it's all good!?
good 'innit!
>> Edited by Smartie on Monday 30th January 01:54
Thanks!
No you can't claim the annual Writing Down Allowance on the car you have sold - just account for the final Balancing Allowance or Balancing Charge arising on disposal(as explained above). Obviously, you can now start claiming the annual Writing Down Allowance on the new car - suitably restricted by the private useage persentage.
Make sure you have some back up of your workings as to how you have arrived at your private use versus business use split and also ensure that you use the same ratio when restricting your vehicle running costs figure in your profit and loss accounts/tax computation.
Make sure you have some back up of your workings as to how you have arrived at your private use versus business use split and also ensure that you use the same ratio when restricting your vehicle running costs figure in your profit and loss accounts/tax computation.
Eric Mc said:
I presume you are aware pf the Expensive Car Restrictions plus the various permuatations on the tax treatment of assets purchased outright, financed by loans or HP or financed by the various types of leasing arrangements?
Trust Eric to be up and about an gawd knows what o'clock and to put a spanner in the works by mentioning paragragh 8, subsection C, line F or whatever
Gassing Station | Business | Top of Page | What's New | My Stuff