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Expense or capital as wda

Modifying bus can i put through as an expense rather than including as captital

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I am just about to launch my business as have a query on an expense/capital.

I have purchased a bus for £24k that will go down as capital expenditure and will claim under wda.

I have spent a further £24.5k having a company modify the bus for me.

I would like to put the £24.k modification as en expense as currently im a sole trader and use this to offset against my profits for this year.

Reason i wish to do this is i have a normal job and im very close to the higher tax bracket plan would be if possible for this tax year to offset against profits meaning i would need to make £24.5k before i start needing to pay tax on earnings however my accountant has advised i need to put both the vehicle purchase and modification down as capital.

Can i do it the way i have said and is this the best method?

Replies (13)

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By chicken farmer
14th Oct 2019 23:57

Your accountant is correct. Do as he says.

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By JDBENJAMIN
15th Oct 2019 13:33

Why do you think we would know your case better than your accountant? Do what he says.

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By The Dullard
15th Oct 2019 13:40

I imagine your accountant is planning to claim AIA, rather than WDA, and thinks you're just an annoying idiot.

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RLI
By lionofludesch
15th Oct 2019 14:04

Do what your accountant says.

It probably won't make a ha'porth of difference to your tax bill.

Or repayment.

In fact, it might be better - there's not enough information to say.

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By raymonddaf
15th Oct 2019 16:10

Come on here to get advice and then get hit with replies that I’m an idiot. Cmon guys I’m only asking a question and looking for some help.

Ibe read up on it and from my understanding the method I say works better for me short term, unless I’m picking it up wrong?

I was under the impression if he puts it down as Wda I can only claim on 18% a year.

2 scenarios keep it simple, based on 24.5k conversion and only taking this into account (and that I’ll be paying higher rate tax)

1.
I make 24.5 k profit
My method of it can be done I put as an expense so £24.5k profit less £24.5k expense = 0 to pay

2
I make 24.5k profit
Accountant method wda Of 18% =£4410. Deduct that from my profit means I pay tax on £20,090 = £8036 tax to pay at 40%

Is that right or am I wrong and if so please explain

Thanks

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Replying to raymonddaf:
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By The Dullard
15th Oct 2019 16:16

Nobody said that you were an idiot. I said that your accountant probably thinks you're an idiot, and you've proved his point. Go back and talk to him/her and try listening this time, because if you listen REALLY carefully, you'll find that 2 will end up being the same as 1, but be correct.

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Replying to raymonddaf:
RLI
By lionofludesch
15th Oct 2019 17:26

raymonddaf wrote:

Come on here to get advice and then get hit with replies that I’m an idiot.

Bit sensitive, aren't we ?

The accounting treatment isn't a matter of choice. There are rules.

If you read the replies instead of taking offence at them, the reason for your error been given already.

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By Matrix
15th Oct 2019 17:21

Assuming the expenditure qualifies for the annual investment allowance then you can claim 18% or 100% or somewhere in between. If you are a higher rate taxpayer each year then it may be better to save some higher rate tax in future years than claim the whole amount this year.

If you don’t trust your accountant then get a new one.

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By Wanderer
15th Oct 2019 17:40

https://forums.moneysavingexpert.com/showthread.php?t=5959933

You are over thinking all of this. Your accountant is probably 100% correct when they have advised that both the vehicle purchase and modification are capital.

That established the various claims for Capital Allowances / Investment Allowance / Writing Down Allowance can be formulated in a number of ways and then the optimum claim may further vary depending on past / present / future income from either the sole trade and/or employment income.

Seriously it's better to get on with what you are good at and take the advice of the accountant you have engaged to give you the best advice.

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By raymonddaf
15th Oct 2019 18:42

For the people that actually gave advice thanks for the others then I have nothing to say someone coming on asking for help..

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Replying to raymonddaf:
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By Whatisname
15th Oct 2019 19:36

raymonddaf wrote:

For the people that actually gave advice thanks for the others then I have nothing to say someone coming on asking for help..

Not a very clear response is it? Try re reading it and then say something that makes sense! No wonder you are questioning your accountants’ advice.

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Replying to Whatisname:
RLI
By lionofludesch
15th Oct 2019 20:36

Whatisname wrote:

raymonddaf wrote:

For the people that actually gave advice thanks for the others then I have nothing to say someone coming on asking for help..

Not a very clear response is it? Try re reading it and then say something that makes sense! No wonder you are questioning your accountants’ advice.

How to win friends and influence people...

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Replying to raymonddaf:
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By Whatisname
16th Oct 2019 19:27

raymonddaf wrote:

For the people that actually gave advice thanks for the others then I have nothing to say someone coming on asking for help..

Sorry if you are offended, but you still have not made your point clear!

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