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.

A worked example

Say a business buys a delivery van for £24,000 (excluding VAT), depreciated over 4 years on a straight-line basis.

Purchase (code 0050): £24,000 debited as the asset cost.

Annual depreciation charge (code 8003): £24,000 ÷ 4 = £6,000 a year, debited as an expense.

Accumulated depreciation (code 0051): credited £6,000 a year — after two years the credit balance reaches £12,000, so the net book value has fallen to £12,000, half the original cost still shown in 0050.

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.