Sole Trader accounting for used van purchase

[gdrinkald1965]

Can anyone help me please? My husband is a sole trader and I do his accounts using Free Agent Software. We do not have an accountant.

How do I account for this situation in a sole trader accounts for the tax year 2022/2023?
Purchase of used van 02.08.2023 for £12,995 +VAT £2,599= Total £15,594
Part exchange given for traded-in van £800
How do I put this in our accounts which are done on traditional not cash basis.
We are VAT registered.
Thank you.

 

[Scalloway]

From here

https://support.freeagent.com/hc/en-gb/articles/115001216950-Record-the-purchase-of-a-capital-asset-for-business-and-personal-use

"To record a capital asset purchase in FreeAgent, you can either add a bill, add an out-of-pocket expense or explain a bank transaction. Please note that recording the cost using more than one method will result in your cost being double or triple counted."

You don't say if your husband is VAT registered. This will affect how the actual ledger entries will look.

 

[numbersrule]

Record the purchase and the part exchange separately so that the old asset can be sold in the Accounts and a new Asset can be created for the new purchase.

I am not familiar with Free Agent but looking at Scalloway's link you have different options for how to process an Asset purchase. In my opinion, the best way would be to create a Bill for the purchase and make the Account the new Asset Account or possibly an existing 'vehicles' account or some such depending on what your Free Agent lists in its Chart of Accounts.

Create a Supplier Credit Note for the £800 including or not including VAT depending on the circumstances of the original purchase and using the old asset account on the Credit Note.

Then you should be able to match the Bill and Credit Note with the bank transaction.

I believe the £800 part exchange should include VAT if you paid VAT on the original purchase.

You will need to record the part exchange amount as an Asset Sale and it will result in either a profit or loss depending on this year's depreciated value of the old van.

You say tax year 2022 to 2023, but 02.08.2023 is in the 2023 to 2024 tax year.

 

[MyAccountantOnline]

Can anyone help me please? My husband is a sole trader and I do his accounts using Free Agent Software. We do not have an accountant.

How do I account for this situation in a sole trader accounts for the tax year 2022/2023?
Purchase of used van 02.08.2023 for £12,995 +VAT £2,599= Total £15,594
Part exchange given for traded-in van £800
How do I put this in our accounts which are done on traditional not cash basis.
We are VAT registered.
Thank you.

Do you use Simplified expenses? https://www.gov.uk/simpler-income-tax-simplified-expenses/vehicles-