Share this content

Super deduction tax question

Corporation tax

Didn't find your answer?

Hi I'm looking for some help , I will probably be wrong what I am asking but here it goes 

I have a small limited company and bought a vehicle last year and I'm looking to change it .

And I was just wondering if I sell the vehicle pickup/van for 26k plus vat and buy a new one at 37k plus vat taking the super deduction tax in to account getting relief of roughly £9250 would it basically only be costing me £1750 to change . As I would be paying that in tax anyway if I never change the vehicle 

any help appreciate 

Replies (10)

Please login or register to join the discussion.

avatar
By GR
20th Apr 2021 23:03

I think you may need to factor in any corporation tax due to HMRC when you sell original truck for £26k

Thanks (1)
avatar
By Fingers80
20th Apr 2021 23:14

Surely if I have to invoice this out as a cost of sales therefor no profit would be made on it as the newer vehicle is more expensive

Thanks (0)
Replying to Fingers80:
avatar
By DaveyJonesLocker
20th Apr 2021 23:18

Oh dear. Oh dear oh dear.

Thanks (0)
Replying to DaveyJonesLocker:
avatar
By Fingers80
20th Apr 2021 23:21

Please explain ?????

Thanks (0)
Replying to DaveyJonesLocker:
avatar
By Fingers80
20th Apr 2021 23:21

Please explain ?????

Thanks (0)
Replying to Fingers80:
Hallerud at Easter
By DJKL
20th Apr 2021 23:52

It is not a cost of sale unless by some freak chance your business is buying and selling vans and even if your business were dealing in vans the new van purchased, if still held at your year end, would need adjusted into your closing stock at the lower of cost and NRV so would not create a deduction within your accounts.

Consulting an accountant is a clever idea, a little knowledge can be dangerous

Thanks (1)
Replying to DJKL:
avatar
By Fingers80
21st Apr 2021 00:02

Thanks for the reply appreciate your time.

No I we don’t buy and sell vans like you say, we are an electrical contractor .
I don’t deal with the invoice side of things in the business I only process the purchase side of things
I bought the vehicle September 2020 , for 28k plus vat , and the accounts have not been finalised yet for that year (up to feb 2021)

Thanks (0)
Replying to Fingers80:
Hallerud at Easter
By DJKL
21st Apr 2021 02:00

Well AIA ought to be available re this van in the year ending 28.2.21, however care needs taken with making claims (you have choices) as depending upon profits claiming could be a good idea or a waste of allowances/reliefs.

There are rarely one answer being universal , dealing with matters re tax often depends on the particular scenario and circumstance , say taking into account all earnings for the year.

I no longer practice but would again state that an accountant is a very good idea to avoid making expensive mistakes which in some circumstances may be more costly than the fee.

Thanks (0)
RLI
By lionofludesch
21st Apr 2021 07:26

If you've not reclaimed any tax relief on the old van, your figures aren't far off the mark.

Except that you ought to factor in foregoing the 19% of £28000 which you would have got if you'd just kept the old van.

Thanks (0)
By Duggimon
21st Apr 2021 09:37

If you bought the current vehicle for £30,000, you could/should have claimed tax relief of £5,700 on it.

If you sell it now for £26,000, you have an additional £4,940 in tax to pay, essentially repaying some of that tax relief. Then you buy a new van for £37,000 and get £9,139 tax relief, a net tax reduction of £4,199.

That's a total tax reduction of £9,899 across the two vehicles, £760 for the loss you made on your first vehicle, and the £9,139 on the new vehicle.

At some point in your calculation you have missed out part of the above and have gotten an answer resulting in free money, which is not correct.

Thanks (1)
Share this content