Q & A's Starting A Business, Vans & Equipment

Q: I have just started my own business. When do I need to register with HM Revenue & Customs?
A: Firstly, you need to work out which tax year your start date falls into. The tax year runs from 6 April to 5 April, so your start date falls into the tax year ended 5 April 2012. You must therefore register by the following 5 October, i.e. 5 October 2012. As you are registering as self employed, the form you need to complete is HM Revenue & Customs form CWF1.
You will also need to pay Class 2 National Insurance which is only £2.50 per week for 2011/12 so most people choose to pay for these contributions via Direct Debit. You will need to complete HM Revenue & Customs form CA5601 if you would like to pay via this method.
Although you have some time before you need to submit form CWF1, avoid leaving it too long. 


Q: We have just started up a plumbing and heating business and we’re going to buy a small fleet of vans and bit of equipment- probably totalling in the region of £60,000. It’s been a while since I’ve run my own business, but I know you used to get 50% of the cost of equipment offset against your profits in the year of purchase and 25% each year thereafter. What are the rules now?
A: In 2008/09 the Annual Investment Allowance (AIA) of £50,000 was introduced, which applied to general plant and equipment. Expenditure up to the AIA can be written down by 100% in the year of purchase. Any expenditure in excess of that or assets brought forward are written down by 20% (writing down allowance). The AIA was increased to £100,000 from 2010/11.
Assuming your vehicles meet the HM Revenue & Customs definition of a ‘van’, they will qualify for the AIA.
Please note, from 2012/13 the AIA will reduce to just £25,000 and the writing down allowance to 18%. If your accounting period straddles two periods when the AIA was different, then the AIA will be prorated. So for instance, if your start date is 1 October 2011 and your period end is 30 September 2012, then your AIA will be:
(6/12 x £100,000) + (6/12 x £25,000) = £62,500