I have decided not to put my clients (sole trader) van as an asset but disallow 20% on the final motoring expenses for personal use. With this said does the purchase of the vehicle get posted to motor expenses aswell or is it not get included in the business accounts?
It was purchased from a personal bank account that has been used for all business transactions.
It would probably be easier as the van belongs to him (bought from his personal account) for him to take the 40p mileage allowance rather than put motoring expenses through and deduct a personal allowance.
Suggest then that you work out the mileage from the fuel purchased, using an average price of fuel for the year (around £4.80 per gallon) and the mpg for the van. so your formula would be "total cost of fuel/£4.80*mpg" will give you a fairly acceptable mileage for the year for the van.
If you don't post the purchase of the van, you cannot post the sale of the van. As it was a personal purchase, I wouldn't put it into the accounts at all. I would only show the mileage allowance for tax purposes. It doesn't mean that you can't account for the expenditure, thus enabling you to reconcile the bank and petty cash but leave it out at the year end.
Just wondering though in this situation is there any way a sole trader can claim for the purchases of a van, due to the fact that it was bought for the purpose of using it for his business?
