Wow Nickole, that is a short question that has a LOT of detail that would need to be answered.
Without meaning to be rude - is this something you should be undertaking for a client or perhaps passing on to a tax Accountant?
If you are sure you wish to go ahead then as a (probably mean) boss I would say to my stafff that this is a great development opportunity - a superb chance for you to learn how to do some in depth HMRC/tax manual digging, with perhaps a re-visit here to clarify your understanding of what you find in each area of the whole question.
Although I maybe a mean boss I would always give folk a bit of a head start on a few things to consider.
First of all - what accounting scheme is this sole trader on - cash basis or accrual? Then - what sector or preferable what business are they in/what do they need work transport for/why a car rather than a van/is the first car in this person's sole name or indeed shared with another/where does the car get parked when not in use/does the driver log their business miles/despite it being a second car is there in fact any personal mileage/what is classed as travel to work and therefore what can be claimed/is this a new business/was there already a vehicle in the business and this is now an opportunity to alter the method being used to claim/have you (or anyone else) calculated the best method for claiming mileage (flat or all in rates)/look at the rules for capital allowances. Just some things to consider.
Additional considerations - are they VAT registered? (not for the car purchase)
There's no straight answer as everyone's circumstances will be slightly different. You need to calculate it out both ways to determine whether it's more beneficial using mileage rates or running the car through the business. (charging business mileage is generally the better option).
Because cars are an area that has been abused in the past there is a lot of regulation around this area. Far more than we can write in a short response here so you would be better doing your own research then asking specifics here rather than generalisations.
regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Crossed in the post. Sorry Joanne. It's all yours :)
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I am definitely not completing any tax returns. A friend has asked me the question. Her husband is a self employed builder filling in his first tax return and wanted to know other than the usual 45p/25p mileage was any further costs he could claim.
-- Edited by Nikole on Monday 24th of April 2017 07:09:15 PM
Far more than we can write in a short response here so you would be better doing your own research then asking specifics here rather than generalisations.
regards,
Shaun.
Ha, no worries on crossing in the post - seems we have both set our challenge to Nikole.
It will be worth spending time on getting to grips with it as its a question that arises often.
I was just telling someone the other day how HMRC can request copies of MOTs to prove overall mileage and then low and behold Ive seen on AWeb mention of someone being investigated and have been asked for exactly that.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I am definitely not completing any tax returns. A friend has asked me the question. Her husband is a self employed builder filling in his first tax return and wanted to know other than the usual 45p/25p mileage was any further costs he could claim.
-- Edited by Nikole on Monday 24th of April 2017 07:09:15 PM
Did he not buy a van rather than a car as a builder?
I would point your pal in the direction on an Accountant as they could well save some £££
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I havn't really asked any questions as it was just a general question. I thought about Capital Allowances but obviously couldn't give any advice as i have only learnt about this in my studies.
The whole thing is a minefield. Even what you might consider a van, might not be a van under HMRC regs, so there are a bunch of very specific questions required to get the answers needed to be able to then to the computations. Seriously if you are not yet ready to delve into this then that's no probs just politely decline to help them as you could fall foul of your PII cover regs and prof body requirements even helping pals out because if you give them the wrong info then they will soon be ex friends and suing you. I won't do any work for friends for this reason. If they want to put it on a proper footing and pay for advice then that's different and indeed they would be silly not to....so just give them that advice as a freebie.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
Remind me what you have now? Wasn't it AAT or part AAT?
ATT or CIOT are the stand alone tax bodies, but you could go on to ACCA. You can opt to do personal and business tax modules at level 4 AAT. Plus then it's keeping up to date.
__________________
Joanne
Winner of Bookkeeper of the Year 2015, 2016 & 2017
Thoughts are my own/not to be regarded as official advice,which should be sought from a suitably qualified Accountant.
You should check out answers with reference to the legal position
I am studying AAT level 4 at present. I've just passed BTAX and am currently studying PTAX. I think i had better get myself through Level 4 beforehand.
-- Edited by Nikole on Monday 24th of April 2017 07:57:44 PM
