Claiming mobility allowance against tax

pstuart

pstuart wrote: »

We had a right old ding dong on here some time ago about this very subject.





We all wait with baited breath for respnse from the DVLA!

TaBunny

BLT wrote: »

This would very much be seen as taking the p*ss I suspect. You buy the car and and pay for it with money using the taxpayers funds, and then want to use it as a business expense to avoid paying tax?

You then drive around in a car with free road tax whilst other able bodied road users are forced to pay.

You seem to be after a free ride in more ways than one would be my view

here here :think:

karanight

TaBunny wrote: »

here here :think:

Couldn't agree more
For those interested in a non pompous answer, I'm
still waiting for a reply from the powers that be

Paul_Varjak

Karanight...

I am not sure that I can answer all your questions fully, but I hope I can give you thoughts to consider.

There appears to be three issues:

1. Can you claim the cost of buying the vehicle as a legitimate business expense?

DLA Mobility Component is money paid to your wife to spend how she sees fit. Once paid to her it is no different to other money she has. If she chose to buy a car with that money or give you the money to buy the car, she can do that and you can claim for expenses in your business, in the normal way

Of course, if your wife obtained the vehicle from Motability, either on Contract Hire or Hire Purchase, I suspect the situation may be rather different. If she allowed you to use the vehicle (for which you would have to pay her, in order for you to claim business expenses), she would then probably be using the vehicle for 'hire or reward' which is not allowed, under Motability scheme rules or RSAM insurance cover.


2. Can you use the vehicle for your work?

If the vehicle is NOT a Motability vehicle, you can, of course, use it for work, with suitable insurance in place.

If it is a Motability vehicle, you will need to get confirmation that YOU can use the vehicle for business purposes from RSAM; you cannot use the vehicle as a taxi or for delivery purposes however. I am not sure if you have to pay extra for this.


3. Can you make use of the free tax disc?

Herein lies the real problem. Since 01/01/2006 Motability has had an agreement with the DVLA that all Motability vehicles will automatically be exempt from VED. That means it is no longer possible to tax a Motability vehicle privately.

In order to qualify for VED exemption, the vehicle may only be used for the direct benefit of the disabled person. Until recently, Motability's view of 'direct benefit' appeared to differ from the DVLA's view. Motability told me some months ago that my future spouse (who will be the main breadwinner) could use the vehicle to drive to work but the DVLA are not happy with that, claiming it would breach the rules on VED exemption.

So, you could find yourself in a 'Catch 22' situation. You may get business insurance for the vehicle, you may even get Motability's 'nod' for you to use the vehicle, only to find a DVLA summons landing on your doormat for misuse of a free tax disc, simply because you can no longer buy your own tax disc for a Motability vehicle.

I hope that helps!

pstuart

Well resourced and thank you!

It would be very interesting to find out how many DVLA 'summonses' for road fund 'technical misuse' have been issued.

Paul_Varjak

pstuart wrote: »

Well resourced and thank you!

It would be very interesting to find out how many DVLA 'summonses' for road fund 'technical misuse' have been issued.

I would like to know too, and I do recall such discussions on MSE before. I suspect that the DVLA would now take a more pragmatic approach given that they reached the agreement with Motability that ALL Motability vehicles would be automatically tax exempt. I think the new arrangements were made so that it was no longer necessary for the vehicle user to be in possession the V5 document, thereby avoiding the loss of the V5 document and to combat fraud.

But not being able to tax a Motability car privately is potentially a real stumbling block, particularly when the main/sole driver is not the disabled person. Children as young as five can get DLA Mobility Component and does the DVLA really expect that the family car will only ever be used for the benefit of that child? Mum or dad will go to work in that car!

Although the DVLA may be lenient in the case of a five year old, they may not be so lenient for spouses, particularly where both are working but it is the non-disabled person using the Motability car.

One possible way around the problem may be to get a vehicle that is tax exempt based on CO2 emissions. In that case, there would be little point in prosecuting a non-disabled person for using a vehicle for not paying for a tax disc, as cars with emissions of 100g/km CO2 (or less) are exempt from VED anyway!

Motability's upgraded website now allows for searches based on CO2 emissions, so it is easy to find VED Band A vehicles...

https://www.motabilityonline.co.uk/carsearch/carSearchByDetailFormSubmit.htm

Indie_Kid

Paul_Varjak wrote: »

Children as young as five can get DLA Mobility Component and does the DVLA really expect that the family car will only ever be used for the benefit of that child? Mum or dad will go to work in that car!

Not being picky; but HRM can be claimed from the age of 3. It could be argued that a parent using their childs' mobility car to go to work is for the childs' benefits. Afterall - parent working = gives child a roof over their head.

Paul_Varjak

sh1305 wrote: »

Not being picky; but HRM can be claimed from the age of 3. It could be argued that a parent using their childs' mobility car to go to work is for the childs' benefits. Afterall - parent working = gives child a roof over their head.

Yes, you are right, THREE is now the minimum age for DLA Mobility Higher Rate Component; I was using information on the lower rate component.

The argument that you use of the parent working = gives child a roof over their head is exactly what Motability would argue. Until recently, Motability did say on their website that the spouse of a disabled person could use the Motability vehicle for work but they have since replaced that with a statement that is more aligned with the DVLA's view on VED tax exempt status for disabled people.

This what the DVLA say...

Restrictions on the Use of the Vehicle

To qualify for the exemption the vehicle must be used by,
or for the purposes of the disabled person – for instance,
to get a prescription or shopping for the disabled person.

If the vehicle is ever used in a way which is not directly
for the purposes of the disabled person the exemption
will be lost and the normal rate of Vehicle Excise Duty
(VED) must be paid.


I think the crucial words are 'direct benefit'; The DVLA does not view using the car to go to work and earn money by a spouse/parent of the disabled person as of 'direct benefit' to the disabled person.

And the problem for Motability vehicle users is that they cannot pay the normal rate for VED because of the agreement between the DVLA and Motability!

Paul_Varjak

It seems that Motability vehicles can be taxed privately, despite what I read on the Motability website; I just had a long chat with a Motability Customer Service representative.

I was told that Motability can issue the V5 document, so that vehicle may be taxed privately. If that is the case then this really does solve the problem for most people over the possible misuse of a tax disc.

I have also just phoned the DVLA who tell me that as long as the vehicle is being used for the benefit of the disabled person (including the non-disabled spouse using the vehicle to go to work) then that would not be misuse of the tax disc - this differs to what they have said earlier!

Bottom line...

Get something in writing from Motability and/or DVLA on the current interpretation. I expect that Motability may be able to put something in writing over their interpretation but the DVLA will simply refer you to the letter of the law, without further interpretation than is currently on their website and leaflets.

antrobus

Karanight wrote: »

Can I claim the cost of buying the car as a business expense even though the government pay the benefit.

One suggestion. Might it not be simpler in the circumstances just to claim 40p per mile for your business travel as an expense against your income from self employment?