Used Cars Top Tax Questions

What is the turnover business? Turnover is the total amount of income a business earns before deducting business expenses. Turnover includes receipts of any kind for goods sold or work done such as commission, tips, payments in kind, fees and insurance proceeds. Include revenue in the financial accounts to the date on which it was invoiced or earned and not the date of receipt.

What is excluded from turnover? Turnover excludes sales of fixed assets such as premises, vehicles and plant and machinery. Also excluded start up allowances which are included separately for the return of self assessment. Money introduced to the business is excluded being capital introduced and not sales.

What business expenses are eligible? All costs incurred for the sole purpose of business can be deducted as allowable business expenses including goods bought for resale, employee wages, premises rent and overheads, administrative costs, operating costs of the vehicle. Interest on loans and overdrafts can be claimed as business expenses excluding the capital element of repayments. Higher levels of corporate spending accurately recorded can keep taxable profit below the higher tax rate.

Can the cost of purchase and repair of plant and equipment be required? Repairs and maintenance costs are allowable business expenses. The purchase cost including improvements and replacement costs are not allowable business expenses, these costs are subject instead to capital allowances. Depreciation is not allowed and replaced by the capital account in the calculation of tax due.

What are the capital shares? Capital shares are designed to amortize the cost of purchasing an asset for the duration of the asset rather than the year in which it was purchased. Capital shares to the majority of activities are based on a higher rate of compensation in the year of purchase, Allowance first year with the balance of the cost of downgrading to a lower rate, writing Allowance. The total cost of any activity that may be claimed as an expense when it is sold or scrapped less the total of accumulated capital allowances that have been claimed on taxable profits. Any proceeds from sales above the written down value after Capital Allowances is added back to net profits and becomes taxable. Cars are subject to write checks, but not First Year bonuses unless they are classified as commercial vehicles. DIY Accounting produce complete models accounting software of Excel spreadsheets to automate accounting functions and capital allowances.

It is used both for personal expenses and business purposes deductible? No. HMRC only allow such expenses if the business expenses element of the cost can be separated from the staff. If you claim travel expenses to buy business assets that can be claimed for tax purposes, but would be disallowed if you also showed evidence of personal items to be purchased during the trip itself. Using your home phone is an allowable business expense if it supports specific identified business calls in which case you would also be able to claim a similar share of the rental cost.

Costs of vehicles can be invoked in the event that the vehicle is also used for personal use? Vehicle operating costs and expenses as fuel, excise duties, insurance, repairs and breakdown membership may be claimed as business expenses if the vehicle is used exclusively for business purposes. Travel from home to work is not commercial use and not allowed. Vehicle running costs and capital allowances on vehicles, are split between the costs that may be required and cost is not allowed according to the proportion the vehicle is used for corporate and personal use. Parking fees for work may be required, fines and penalties for car expenses are not deductible as business expenses for tax purposes. Instead of vehicle operating costs, which for tax purposes would include tax cuts on capital vehicles, the mileage allowance 40p per mile for first 10,000 miles and 25p per mile can be claimed later in each fiscal year.

Business trips can be requested? Travel expenses and modest lunch expenses may be required. Hotel expenses and reasonable subsistence may also be required. If the residence during the night happens to be with friends or family, then the means of subsistence may be claimed as an alternative to the bill. The cost of lunch may not be allowed when staying away overnight. Lunch with clients is regarded as entertainment and is not allowed. If you are accompanied on a business trip the family is excluded and only the cost, especially if the trip was purely for commercial purposes. Cost of combined work and personal trips can not be deducted as business expenses on your tax return.

Can be obtained from the house costs? If part of your home is identifiable as solely for business purposes then running costs can be requested. The cost is permitted, the proportion of the total commercial area of ​​the house occupies. For example, excluding shared facilities of kitchen and toilet if the home has three bedrooms, living room and dining room and one bedroom is only used as an office of 1/5 of household expenses could be claimed. The costs to claim would be heat and light, insurance, general and water rates and mortgage interest excluding amounts for reimbursement. If mortgage interest is claimed the revenue might also consider a capital gain the increase in the value of that part of the house, such gains are subject to tapering relief over time.

In the case of business goods taken for my personal use to be included? All commercial goods taken for personal use must be added to sales at normal selling prices including items supplied to family and friends at less than normal prices. He cost of providing services for family and friends is not allowable as a business expense.

Can I deduct the salary or drawings as a business expense? You can not deduct your own wages, personal national insurance or drawings from the business as a business expense as these are distributions of business income, net profit after tax was calculated and not allowable expenses before tax ..

Can I deduct my partner's wages? Yes, partners wages can be deducted as a business expense although there are rules that would apply in circumstances such as to secure the amount paid is real and reasonable. The company would need to run a PAYE scheme for that employee, deducting income tax and national insurance, the work must not be invented and the real rate paid reasonable for the nature of work and time spent. The tests may also be required that the amounts actually paid to the partner physically, for example in the form of a check.

In the case of tax credits to be included? No these are excluded from business profits although the level of credit received may subsequently be amended in view of the actual business profit earned compared to the amount declared when the Tax Credit has been requested. HMRC does not verify that the net tax indicated in the tax return is the same as that declared when the Tax Credit was claimed.

Can I claim expenditure incurred prior to trading begin? Yes business expenses incurred up to seven years before starting the negotiation may be required. The effective date of the expenditure should be recorded, even if all the pre-trading expenditure is treated as having been incurred on the first day of trading.

Car pool are taxable? Company cars are taxable as a taxable benefit while pool cars are not taxable. To qualify as a pool car, private use should be ancillary to commercial use, the vehicle should not be required to house the employee and the vehicle must be available and used by more than one employee .......