Buying my vehicle

[RobinW]

Hi,

I am a sole trader and I have recently bought a commercial vehicle and I am struggling to get to grips with how to enter it on my account software and looking forward, to include it on my tax return. If I run through how I have purchased it, maybe someone would be kind enough to point me in the right direction, as I thought I knew what I was doing until I over thought it!

I introduced capital to my business account with personal money (£19000 personal loan), and with that I purchased a van for £19000. The van will be used solely for business and not for personal use, and I shall keep mileage records to support this. My accounts package records this as a vehicle purchase and one presumes that the amount spent will be reflected in my tax return, as the van is a company purchase. My problem is then how do I reclaim that introduced capital monthly? How do I record it? And presumably I should be charging interest on the capital introduced to pay the correct monthly charge?

This may be more simple than I am making it, which is why I’m throwing it out there as I seemed to have got myself in a bit of a knot!

Many thanks in advance

 

[David Griffiths]

Clarification is needed. Are you saying that you've taken a personal loan for £19,000 and paid that in to the business, or are you saying that you've simply introduced £19k of your personal funds (no loan?)

If it's a loan, then I'd show the money going in to the business as a loan from the relevant lender, set the future repayments against the loan and reflect the interest on that account.

If it's just your own money, then that would be shown as capital introduced. Anything that you take back out would go down as drawings. You can't charge yourself interest.

 

[DWS]

Good advice above for the bookkeeping but you also need to consider the tax side of things, will you claim AIA on the purchase or just claim the mileage, or even some AIA followed by written down allowances, all depends on your level of profits and then tax planning to work out the most beneficial way.

 

[Baines Watson]

Hi,

I am a sole trader and I have recently bought a commercial vehicle and I am struggling to get to grips with how to enter it on my account software and looking forward, to include it on my tax return. If I run through how I have purchased it, maybe someone would be kind enough to point me in the right direction, as I thought I knew what I was doing until I over thought it!

I introduced capital to my business account with personal money (£19000 personal loan), and with that I purchased a van for £19000. The van will be used solely for business and not for personal use, and I shall keep mileage records to support this. My accounts package records this as a vehicle purchase and one presumes that the amount spent will be reflected in my tax return, as the van is a company purchase. My problem is then how do I reclaim that introduced capital monthly? How do I record it? And presumably I should be charging interest on the capital introduced to pay the correct monthly charge?

This may be more simple than I am making it, which is why I’m throwing it out there as I seemed to have got myself in a bit of a knot!

Many thanks in advance

As you are operating as a sole trader, personal funds used to buy vehicle for business purposes is simply owner funds introduced which you can withdraw form the business as and when you want and record it as drawings against the owner funds introduced. Given your status as a soler trader, there is no difference of legal and tax status between you and the business, it's one and the same entity so no interest charges etc can be added.

You can claim capital allowances, annual investment allowances or first year allowances on your self assessment tax return for the van purchase depending on the make / model of the van. if 100% business use and you are VAT registered then can also reclaim the VAT on the van purchase.

Best to engage a qualified accountant to review all the details and provide tailored advice so your tax position is optimized for this.

 

[RobinW]

Thank you, it’s what I thought as far as if you take one way of doing it you can’t claim the other also, and I think it was that I needed clarification on. I just need to determine which way works best, I originally wanted to claim back through the business as I am getting a bit fed up with depreciating my nice personal car and just being able to claim mileage which doesn’t really cover this.

 

[MyAccountantOnline]

Hi,

I am a sole trader and I have recently bought a commercial vehicle and I am struggling to get to grips with how to enter it on my account software and looking forward, to include it on my tax return. If I run through how I have purchased it, maybe someone would be kind enough to point me in the right direction, as I thought I knew what I was doing until I over thought it!

I introduced capital to my business account with personal money (£19000 personal loan), and with that I purchased a van for £19000. The van will be used solely for business and not for personal use, and I shall keep mileage records to support this. My accounts package records this as a vehicle purchase and one presumes that the amount spent will be reflected in my tax return, as the van is a company purchase. My problem is then how do I reclaim that introduced capital monthly? How do I record it? And presumably I should be charging interest on the capital introduced to pay the correct monthly charge?

This may be more simple than I am making it, which is why I’m throwing it out there as I seemed to have got myself in a bit of a knot!

Many thanks in advance

If you borrowed money to buy the vehicle (as opposed 'borrowing' your own funds which is capital introduced) you record that as a loan, often it'll appear in accounts software like another bank account, and the repayments you make are then transfered to that account and you record as a payment the interest and charges on the loan.

You'll record the vehicle purchase as a fixed asset.

If you let us know which software you are using I may be able to be a bit more specific if I am familiar with the software.

 

[JEREMY HAWKE]

You dont need to record the milage if it is business use only