blip

I'm getting myself in a pickle this year with my tax return and wondered if anyone knows whether you have to declare a bank loan as 'income'. I'm self-employed and took out a bank loan in the year in question so I could buy a *cough* new WRX

As I have to pay the loan back (plus interest) over three years does it actually count as income in the year I took the loan out?

Also as I used the money to buy a car (which of course I use purely for business use) can I still claim a capital allowance for the car?

Please help, I don't have much time

Andy486

Only counts as income if you don't have to give it back otherwise we'd all be paying tax on our mortgages! If your loan was subsidised by your company you would have to pay tax on the interest savings but otherwise I think you're OK. Ring the IR helpline if you're still unsure.

andrewdelvard

st call 'em mate. Honestly I've done it in the past on very similar questions and they have been brilliant 0845 9000 444

eClaire

Self Assessment Helpline = 0845 9000 444

4X4BOB

*WARNING* I know nothing!

If your claiming the cost of the car etc then you will have to put the loan down, but think its more complicated than that.

In the 2001 - 2002 tax year I bought 2 new vehicles for the business and made some sort of error in my tax forms(dont know what?) which the IR picked up on. No major drama, they asked for the purchase invoices and then amended my tax bill which resulted in me paying them an extra few quid.

Worse case scenario is that the IR banckrupt you and throw you in jail so nowt to worry about

Bob

Dunk

iTrader: (1)

You certainly won't need to declare the loan advance as income.(It's funding not profit.) Depending on circumstances of the use of the car for business purposes, you will need to agree a % split between business & private use with the IR, inorder to claim any capital allowances or relief for the interest paid.
Without knowing all the facts it's difficult to say, ring the helpline, they're actually a friendly bunch !

D

Darren R

I can give the details of a good accountant

blip

Thanks guys I'll give them a call tomorrow

James Neill

iTrader: (1)

Just call them - honestly they've been brilliant every time I've needed help

fast bloke

OK - I'm a bit bollixed, but I haven't paid any tax in 4 years, so I hope this helps.
You can depreciate your car as a single asset over 1 year or as a depreciable asset over three years. If you made the value of the car in the year of purchase I would depreciate as a single asset. if you hit the 40% bracket try and use it to stay in the 23% bracket.

To be totally honest - get an accountant - mine costs £250.00 a year. I reckon he has saved me at least 16k. - If he needs a BJ instead of £250.00, then so be it - Better than taking it up the *** from the taxman

kend

1)A bank loan is not income.
2)If you are self employed you can claim a proportion of your total motor expenses (including insurance/fuel/service etc against tax) This has to be an accurate reflection of the amount of miles you actually do for work, and you can't count driving to or from your main place of work. (ie you can't count the 20 mile drive to work, but once you are there if you drive to see a customer then you can count this) You need to keep a mileage log to back this up, as the Inland Revenue have started to investigate a lot more people.
3)The interest on your bank loan, provided it is used entirely to pay for a care, is a legitimate motoring expense, and as above you can claim a proportion against tax
4)Don't forget the depreciation of the car ( I believe 25% per year) which can also be claimed proportionally as above.

Disclaimer: I'm self employed and claim all this stuff, but I have an accountant to check it for me. If you do the sums yourself and get them wrong it's not my fault.