Skip to main content

This is a new service – your feedback will help us to improve it.

Posted Mon, 27 Sep 2021 22:14:34 GMT by Jose Carlos
Hi, I am a sole trader and I am using Traditional Accounting (no cash basis). I used a personal loan to pay for a equipment (machinery). I am payment monthly instalments to repay the loan (capital + interest). I understand you can cannot claim the loan interest using Capital Allowance. How can I claim the interest I am paying for the loan? Should I put the monthly payments as trading expenses? Or should this go to Capital Allowances (AIA or writing down allowance), if so, will the interest go there as well? Or is it recommended to change to Cash Basis and claim the monthly payments as trading expenses? Thanks for your help Kind Regards Jose
Posted Tue, 28 Sep 2021 11:43:08 GMT by HMRC Admin 17

Hi,
 
You can claim the interest as an ordinary expense. You can enter this as other allowable expenses.

You can either claim the monthly costs as an expense or claim the capital allowance for the capital element.

Guidance on capital allowances can be found here :

Capital allowances and balancing charges (Self Assessment helpsheet HS252)    .

The interest in these cases would be kept separate.

Thank you.
Posted Tue, 28 Sep 2021 12:18:51 GMT by Jose Carlos
Thank you for your reply. When you say “claim monthly cost as an expense” is that including the cost of the item plus the interest, that I’m paying monthly to repay the loan? Many thanks Jose
Posted Thu, 30 Sep 2021 10:17:48 GMT by HMRC Admin 20
Hi Jose Carlos,

Yes you can claim the interest as well. 

Thank you.

You must be signed in to post in this forum.