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AIA on sale of VAN

A client bought a van for £4000 in the last tax year which full 100% AIA was claimed on. He has now sold it for £2000 and bought another van for £10000. Is the £10000 available to claim in full at 100% AIA and the balance charge of £2000 added back to profits?

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By puzzel
11th Apr 2012 15:47

Not included in P&L accounts

but removed when computing the profit's for tax, as the sale value would come under the balancing charge part of the tax computation.

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By Exector
11th Apr 2012 16:42

New Van addition qualifies for AIA in the Accounting period of purchase, subject to the annual maxima for all AIA claimed (£100K/£25K)

The disposal value of the old van is deducted from the WDV b/fwd of the general pool before any 20% (18%) WDA is calculated on any balance. If no WDV b/fwd or less than £2K, then BC of balance up to full sale proceeds as appropriate.

 

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11th Apr 2012 17:40

Be careful

If the van was bought in the last few days then the AIA may be restricted.   The AIA for purchases post 5 April is apportioned to the end of the accounting period.  Therefore, if he has a 30 April year end and bought the van on 6 April my understanding is that the AIA is restricted to £2,083.  If he did not use any AIA pre 5 April that is just lost

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By blok
12th Apr 2012 09:34

.

Paula are you suggesting that a business with a 30 April year end only has an AIA of £2,083?

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12th Apr 2012 09:41

Yes

The AIA is apportioned across the accounting period.  A 30 April year end produces AIA of 11/12ths of £100,000, so that the proprietor can claim allowances on purchases of up to £91,666 if made before 5 April 2012.

In the period 6 April to 30 April the allowance is £2,083.

If you bought an asset for £50,000 on 4 April the AIA avaiable is £50,000.  If you delayed purchase until 7 April the deduction is £2,083 and the balance of cost is carried forward in the appropriate pool.

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By blok
12th Apr 2012 09:52

.

thanks,

I was aware of the quirk in the rules but had not quite remembered the detail.

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