Motor Vehicles and Their Depreciation: Codes 0050 & 0051

A company van or car is one of the more expensive fixed assets a small business owns, and one where VAT treatment on the original purchase is often restricted. Sage still handles the accounting the same way as any other fixed asset — cost and depreciation kept in separate codes.

The two codes, and what each one holds

Code 0050 — Motor Vehicles records the cost of vans, cars and other vehicles owned by the business. As a Fixed Assets code it normally carries a debit balance, increased on purchase and reduced only on disposal.

Code 0051 — Motor Vehicles Depreciation is the accumulated depreciation contra-account sitting alongside 0050, normally carrying a credit balance. Each year's charge (posted as an expense to code 8003) increases this credit balance, writing the vehicle down without changing the original cost in 0050.

Real-world examples across industries

Logistics and distribution

A distribution business buys a delivery van for its fleet, invoiced at £30,000 (£25,000 net). The entry is a debit of £25,000 to 0050 (Motor Vehicles), a debit of £5,000 to 2201, and a credit of £30,000 to 2100 — vans count as commercial vehicles for VAT purposes, so the input VAT is normally reclaimable in full. High daily mileage means a short useful life, say 5 years, giving an annual depreciation charge of £5,000: debit £5,000 to code 8003 (the depreciation expense), credit £5,000 to 0051 (Motor Vehicles Depreciation). After two years the accumulated depreciation in 0051 reaches £10,000, leaving a net book value of £15,000 against the £25,000 still shown in 0050.

Field sales

A business buys a company car for a field sales rep, invoiced at £28,000. Because cars almost always carry some potential for private use, input VAT on buying one is normally blocked entirely unless the business can prove the car is never available for private use — rare in practice — so the full £28,000 is debited to 0050 with nothing reclaimed through 2201. A lightly-used car like this is usually assumed to have a longer working life than a van doing daily rounds, say 7 years, giving a smaller annual charge of £4,000: debit £4,000 to 8003, credit £4,000 to 0051.

Trade business replacing an ageing van

A plumbing firm sells its old van, originally costing £20,000 and now carrying £16,000 of accumulated depreciation in 0051 — a net book value of £4,000 — for £6,000. Disposal clears both sides: credit £20,000 to 0050 to remove the original cost, debit £16,000 to 0051 to remove the accumulated depreciation, debit £6,000 to 1200 (bank) for the proceeds received, and credit the £2,000 balancing figure to 4200 (Sales of Assets) as the profit on disposal — the amount the sale proceeds exceeded net book value by. Leaving either 0050 or 0051 unadjusted after a disposal would leave a vehicle the business no longer owns sitting on the fixed asset register.

Why this matters day to day

Vehicles are usually the fixed asset most likely to be part-exchanged or sold on, so getting the disposal entry right matters — clearing both the original cost in 0050 and the matching accumulated depreciation in 0051, then recognising any profit or loss on the sale, rather than leaving stale figures behind for an asset the business no longer owns.