aia on van then wrote off and insurance claim more

Didn't find your answer?

sole trader bought van in 2019 and wrote off 2022 and insurance gave £2000 more than origanally paid for it, do I use the original cost or the inusrance claim money as the balancing charge?? (AIA claimed in 2019)

sorry seems a silly question but it is hot and friday

 

thanks

Replies (13)

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By Laurence52
09th Jun 2023 14:39

Balancing charge equals cost.
The excess over cost so £2k would be a chargeable capital gain so would only need to declare that if there were other gains in the tax year.

Thanks (1)
Replying to Laurence52:
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By frankfx
09th Jun 2023 16:17

Laurence52 wrote:

Balancing charge equals cost.
The excess over cost so £2k would be a chargeable capital gain so would only need to declare that if there were other gains in the tax year.

fact... it is Friday

fact... it is hot here

fact.... capital gain on sale of van. I doubt it very much!

Check out the legislation. it may help you cool down.

fact.... client should be happy?

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Replying to frankfx:
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By The Dullard
09th Jun 2023 16:28

frankfx wrote:

fact.... capital gain on sale of van. I doubt it very much!

Pourquoi, Frank?

frankfx wrote:

Check out the legislation. it may help you cool down.

Je vous suis d'accord.

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By Catherine Newman
10th Jun 2023 08:49

Balancing charge of £2,000. CGT doesn't come into it.

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Replying to Catherine Newman:
By Ruddles
10th Jun 2023 09:11

Wrong on both counts. I’ll give you the benefit of the doubt and assume that you did not read the question properly.

Whether there is a balancing charge will depend on (a) whether the van was separately pooled or (b) if in the main pool the TWDV of the pool.

In any case, proceeds to be taken into account are insurance proceeds, restricted to cost.

Excess over cost (ie £2k) is a chargeable gain. Possibly subject to a measure of small chattels exemption .

Thanks (3)
By Ruddles
10th Jun 2023 10:09

PS - may I please have a note of the name of the insurance company that is willing to pay out £2k more than the cost of a van.

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Replying to Ruddles:
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By SJRUK
10th Jun 2023 16:25

Ruddles wrote:

PS - may I please have a note of the name of the insurance company that is willing to pay out £2k more than the cost of a van.

It's not unlikely, since Brexit the cost of vans, both new and secondhand, have shot up.
My OH got more than he paid for it on van on the open market 3 years after he bought it brand new.

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Replying to SJRUK:
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By Hugo Fair
10th Jun 2023 16:55

It's got nowt (or *very* little) to do with Brexit.

But everything to do with Covid ... or rather the chaotic impact that closedowns had both on raw material mining and the fabrication of electronic components.
When combined with variable border control restrictions, the result has been:
(a) a worldwide shortage of those key components of all modern vehicles, and
(b) inconsistent bottlenecks in the supply chain for each vehicle manufacturer.

And so back in the world of supply & demand:
* fewer new vehicles means big price increases AND long waiting-lists
* which creates increased demand for secondhand vehicles AND higher prices
... to the point where some people have new cars on order, but pay a substantial premium on even the increased prices for a nearly-new (1-2 years old) vehicle whilst waiting for the new one.

Hence a car or van that is worth more than what it cost new. Crazy times indeed!

Thanks (3)
Replying to Hugo Fair:
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By Hugo Fair
10th Jun 2023 17:47

Mentioned this to an old colleague who's visiting from Melbourne ... he tells me that a new top-of-the-range RAV4 (which should be just under A$40k) currently has an average wait time there of between 18 months to 2 years.
But anyone just taking delivery can immediately sell it for around A$70k!

Can't see how Japan-Australia (or points between) have been impacted by Brexit?

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Replying to SJRUK:
By Ruddles
10th Jun 2023 18:17

I’m aware that s/h car values have held up well, wasn’t aware that vans had done likewise. Still surprised that an insurance company would be prepared to put a value > original cost. But I guess market value is market value.

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Replying to Ruddles:
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By DKB-Sheffield
10th Jun 2023 19:15

Ruddles wrote:

I’m aware that s/h car values have held up well, wasn’t aware that vans had done likewise. Still surprised that an insurance company would be prepared to put a value > original cost. But I guess market value is market value.

Aye. 'New for Old', and MV policies are in short supply.

Which makes me wonder...

Just out of interest (for the OP). You have actually seen the claim documentation and have confirmed that the claim relates *wholly* to the value of the vehicle - haven't you? Have the insurers paid additional cost such as van hire, loss of earnings etc.?

Additionally, have you checked that the higher payment isn't for enhancements/ modifications/ contents? These may be fixed to the vehicle (crane/ skip lifting gear) or separate - sat navs etc.

I have clients who buy panel vans or flat bed vans, enhance them considerably through capital additions, and are left with vehicles with a much higher base cost than the panel van/ flat bed alone.

I'm sure you've covered this but, just in case you haven't, I thought I'd stick my oar in.

Thanks (1)
Replying to Ruddles:
By Duggimon
12th Jun 2023 12:08

If anything vans have done even better than cars, traders are in some cases struggling to find a van at all. I have a client in the industry who's doing rather well out of it though I think it's starting to calm down again.

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By Laurence52
10th Jun 2023 11:01

Regarding the capital gains aspect, my reading of Tolley's is that as the van is "moveable", must have a life of under 50 years, and that capital allowances were claimed then the £2k excess is potentially chargeable depending on if there were other gains.
Proceeds would be the insurance amount. If that's not more than £6k, there's no chargeable gain. If over £6k, then the gain would be either £2k or 5/3rds of the excess of the proceeds over £6k if that's less than £2k. If my calculations are right, the 5/3rds would apply if the proceeds are between £6k and £7,200.
Apologies if I'm incorrect but it's a hot day here (that's my excuse).

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