David Franks
Blogger
0
1627

# AIA on sale of VAN

AIA on sale of VAN

• ### Tax implications when selling business

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?

### Replies

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.

Thanks (0)
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.

Thanks (0)
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

Thanks (0)
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?

Thanks (0)
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.

Thanks (0)
By blok
12th Apr 2012 09:52

.

thanks,

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

Thanks (0)