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Posted Wed, 23 Mar 2022 09:15:36 GMT by Jonathan Feacy
Hi, My lease van contract has ended and I've had to sell the van as I'm not allowed to keep it under the contract. I've paid the balloon payment. The van sold for £13,500 The balloon payment was £8,500. As I'm self employed does the money from the sale get put though the books as business income ( therefore taxable)?
Posted Wed, 23 Mar 2022 15:33:00 GMT by HMRC Admin 17

Hi,
 
If you have claimed Capital Allowances please review the relevant helpsheet HS252  :

HS252 Capital allowances and balancing charges 2021   .

Thank you.
Posted Wed, 23 Mar 2022 15:53:53 GMT by Jonathan Feacy
Admin 17, Thanks for the reply, I've read the helpsheet but it doesn't mention anything about lease hire vehicles. I've always had an accountant do my books and this is the first return that I'm submitting on my own. As I've not actually purchased the van there was no purchase cost just a deposit. Does the capital allowance still apply?
Posted Fri, 25 Mar 2022 10:30:52 GMT by HMRC Admin 20
Hi Jonathan Feacy,

If it was a leasing arrangements where there is no option to purchase the vehicle at the end of the hire period, then any payments under this type of plan would be treated as expenses for renting the vehicle and capital allowances would not be at point.
If, however the contract was a hire purchase or similar contract (where the person makes use of the asset while paying for it in instalments and where title shall or may be transferred on performance of the contract or for a nominal sum), then. you might be entitled to claim capital allowances and you would need to consider this guidance:  https://www.gov.uk/hmrc-internal-manuals/capital-allowances-manual/ca23310

CA23310 - Plant and Machinery Allowances (PMA): hire purchase: notional ownership CAA01/S67

Thank you.
Posted Fri, 25 Mar 2022 11:20:51 GMT by Jonathan Feacy
Hi thanks for the reply, Yes there was no option to buy at the end, I either had to sell privately or give it back to them to sell on my behalf. I sold privately and the money was payed directly to me. I've payed the balloon payment which goes as an expense. So the question is does 100% of the money I received for the sale of the van get put down as business income and taxable?
Posted Tue, 29 Mar 2022 10:38:55 GMT by HMRC Admin 17

Hi,
 
A terminal rebate amount received following the termination of a finance lease is normally taxable revenue,
as it reflects a refund of rentals that have been allowed as an expense in an earlier period. 

I would expect the lease agreement to provide more detail on this matter.  See link:

Business Leasing Manual    .

Thank you.

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