EV Write off - tax allowable

[melbeams]

Hi - new to quickfile ,well reasonable new.
How should I write off the value of my new EV purchase which may be offset again profits for tax purposes.
If I do as a journal entry for depreciation it does not show the expect reduction in profits / tax
Thanks for any advice
Andy

[Darren_Smith]

Hi,

If you’ve purchased a new electric vehicle, you can claim the First Year Allowance of 100% of the cost through Capital Allowances when you submit your tax or corporation tax return.

The claim won’t show in Quickfile (QF) because your financial accounts which are recorded in QF, are used to prepare your statutory accounts and your tax return. One feeds into the other, but they are separate.

Your QF accounts should record depreciation of the vehicle to represent how much of the vehicle’s useful economic life has been consumed, but this depreciation is disregarded (added back) when your accounts are being converted into statutory accounts, capital allowances are used instead of depreciation.

A journal entry for depreciation expense should increase your ‘overheads’ and reduce your profits in your profit or loss report.

And it should increase your accumulated depreciation and reduce the value of your assets - motors in the Balance Sheet.

The journal would be:

Debit: Depreciation - Motors by £x
Credit: Accumulated Depreciation - Motors by £x

And the initial purchase of the vehicle would be recorded as:

Debit - Motor Vehicles (asset at cost) by £x
Credit - Bank by £x

Hope this helps