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What is taxable when you sell a commercial vehicle or other equipment?

Source: HM Revenue & Customs | | 28/01/2019

When you purchase a van or other equipment that qualifies for tax relief, the cost of the asset is reduced - for tax purposes - by the amount of any capital allowance you claim.

Consequently, if you sell the asset at a later date you will need to compare the tax written down value (cost minus any capital allowances claimed) with the sales proceeds.

If the amount you receive on sale is higher than the tax written down value, then this profit will be added to your taxable income for the relevant tax period.

If the amount you receive is lower than the tax written down value, you can write off the difference against your related profits for the relevant tax period.

Planning note

You don't need to physically sell an asset to trigger a disposal for tax purposes. You will also be considered to have disposed of an asset if you: give it away as a gift, transfer it to someone else, swap it for something else, get compensation for it - like an insurance payout if it’s been lost or destroyed, keep it, but no longer use it for your business or start to use it outside your business.

 

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McAllisters is a partnership trading from Paxton House, 11 Woodside Crescent, Glasgow providing accountancy and tax services and general business advice and is a member of ICAS (Registration No 0342) and an FCA exempt professional firm (No 301235). Its VAT number is 261 3019 94

McAllisters (Scotland) Ltd is a related business providing tax and business advisory services to McAllisters and its clients. McAllisters (Scotland) Ltd is registered in Scotland (Registration number SC146856). Its VAT number is 624 0564 62.

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