Tax question

[audi321]

If a self employed person (window cleaner) takes out a personal loan to buy new equipment, can they claim back the loan repayments against tax or is it just the interest, or can they not do it at all as it's a personal loan? They also have a small employed income too (different industry) of £5,000.

i.e. Income of £20,000 during the tax year from windows, £5,000 from employed income.

Loan of £3,500 to buy ladders, van etc over 2 years at £180/month. Can they claim back 20% of £2160 (£180 x 12) or just the interest element or nothing?

Cheers all....just trying to help a mate out

[Eric Mc]

Interest.

Why should the capital element of the repayment be allowed as a deduction for tax purposes? After all, the capital sum received from the lender isn't taxed as "taxable income".

[sumo69]

Eric Mc said:

Interest.

Why should the capital element of the repayment be allowed as a deduction for tax purposes? After all, the capital sum received from the lender isn't taxed as "taxable income".

+1

[PurpleMoonlight]

You can of course claim tax relief on the depreciation of the latters, van , etc so you do sort of get tax relief on the capital borrowed but via a different method.

[Jockman]

PurpleMoonlight said:

You can of course claim tax relief on the depreciation of the latters, van , etc so you do sort of get tax relief on the capital borrowed but via a different method.

Can you get tax relief on depreciation

[Countdown]

Jockman said:

PurpleMoonlight said:

You can of course claim tax relief on the depreciation of the latters, van , etc so you do sort of get tax relief on the capital borrowed but via a different method.

Can you get tax relief on depreciation

Yes. Sort of. It's actually called capital allowances. Effectively the cost of buying the asset / equipment is offset against your income thereby reducing your taxable profits.

[Eric Mc]

In most cases, HMRC substitutes their version of "Depreciation"which is called "Capital Allowances".

However, there are some special cases where the normal accounting "depreciation" charge is the cost that is used for the tax relief claim.