...I have always been taught that it's best practice not to allow loan protection insurance as any income proceeds would be taxable.
When a client pays "GAP" insurance on a van HP to cover the difference between the insurance value if the van is written off and the HP redemption, is this allowable?
Also, when payment protection insurance is paid to cover the HP payments ONLY is this generally allowable?
The van is 100% business use.
Kevin Read
Replies (2)
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Can anywone answer this?
That's a good question Kevin and I can't believe that it hasn't received any responses! Can anyone answer this?
GAP protection
Kevin
I am a new user to accounting web so forgive me if you have had already had numerous replies which I somehow haven't picked up. Your query was from 2006 so presumably you have already dealt with it somehow or other.
I think that the insurance is a revenue item, as it is effectively to cover the loss in value of an asset in certain situations in a specified period. However, I think it should be charged to P&L over the term of the agreement.
Hope this helps
John Guy