Self employed last return Annual Investment Allowances

[felixcanis]

My OH has recently ceased being self-employed as a farmer. Whilst closing the business he has sold various farming machines (tractor, digger etc) and I am wondering how I report their value on the accounts & then on the final self employment tax return.

Most of the items were bought during the self employment and he put an amount in the Annual Investment Allowance(AIA) in the relevant tax year. I'm unclear what happens now he's sold the items.

I had thought the AIA formed the basis of a pool for these items, with some being long life items in a special pool. These have been written down in the farm accounts at the rates shown on HMRC. There's a balance in each pool but this balance doesn't cover sale value.

Example numbers - Sale of machines & other equipment £10K. Pool value £8K. I assume this leaves a profit of £2K.

There are other sales & income from the farm as well as personal dividend & savings income to be reported & only minimal expenses - these I understand how to handle, but I confused about the sale of these capital items.

What do I put where on his tax return?

Many thanks.

FelixC

[felixcanis]

OK, I've had another go at understanding the AIA - it seems that the amounts we put into the AIA box over the years have been used to reduce the profit in that tax year.

So what we're left with is a possible asset pool of various capital items he bought before going self employed, but that were only used for the farm business such as the tractor & various other agricultural machines that were sold recently when he stopped self employment & we sold the farm.

He bought a variety of farm equipment when the holding was purchased, but didn't register as self employed until we started making sales/income. This expenditure was never reported on the simple self employment return. Is this capital equipment part of a 'pool' that gets written down so that the residual value can reduce the profit due to their sale on the tax return?

FelixC
Apologies for another post - a girl's got to do something on a wet Sunday evening...

[doug2500]

I'm sorry I can't help you, but I can't help thinking this is a job for an accountant? Especially with the sale of the farm to consider.

You never know, they might even save you money. (I wouldn't bank on that but at least you could relax knowing everything was right)

[felixcanis]

Aye, that's probably right, I've done OK with the VAT man & the usual annual returns but feel out of my depth now.

We had approached a specialist accountant, recommended to us by our farming neighbours, when my OH started out. He said as we were such a small outfit - only 50 acres & therefore a relatively small turnover - it would be better for us if we could DIY as we seemed to know what we needed to do. He didn't think he could save us money.

I think perhaps we might try to find a local accountant in our new area for this final return. I remain confused about how to handle the AIA and the proceeds from the sale of the major equipment - despite reading the info on HMRC and various postings on the 'accountingweb'.

Thank you for replying.

FelixC