Capital Allowances - Vehicles

triplea35

Hi

This is my first year for a self assessment and I would like to complete it without recourse to an accountant. It is only capital allowances that I am struggling with.

I registered as a self employed driving instructor in November 2010. I had been training since before the beginning of the last financial year and took pupils out but not for reward but to help promote my future business and also to assist my training. Since qualifying in November I have been receiving an income from tuition.

Late March 2010 I purchased a new car, fitted with dual controls, for £10800. In the years upto April 5th 2011 I have done 21000 miles, the vast majority for either training, promotion or for reward when I qualified. There is a very small percentage of private use but I did have access to another family car.

Now I understand that a driving instructor vehicle can be treated as 'plant & machinery' and the entire cost of the vehicle be claimed against in the first year. I was planning on doing this with this vehicle.

On the 29th March this year though I brought two other vehicles into the business. The first car was too expensive on petrol so have now got a diesel vehicle on a one year contract hire. I understand I can claim the entire cost of the contract vehicle but this will only be for one week of the 2010/2011 tax year.

I still used the first vehicle upto the end of the last tax year for exisiting pupils etc but have gradually changed them over to the new vehicle nor. I have kept the first vehicle though as a 'spare', will possibly rent out to another instructor friend, but currently my son is using the vehicle for private use. I am unsure for the next year what the percentage of private use will be but I would imagine it will be significant.

On the 29th March I also purchased another new vehicle, a small automatic. My wife will use it and I will have it fitted with dual controls for occassional demand for automatic tuition. As both will be dairly small amount of use I would hope that we keep this vehicle for quite some time- perhaps seven years.

So the questions:

Can I claim the 100% value of the first car in the 2010/2011 tax year? When/if I stop using the vehicle as an instructor vehicle would I have to use the residual value of the vehicle as a credit back into the business. As I am keeping it as a spare would this only come into force when I actually disposed of the vehicle.

For the automatic, I uderstand I can write off each vehicle differently, so would imagine the yearly depreciation, is it 20%, would be best. If the car is used for 50% of the time for tuition would I therefore only claim 50% of the depreciation. Pretty sure I am using some wrong 'terminology' but hope someone with a bit of knowledge understands what I mean.

I know I can ring the self assessment helpline for advice but understand they may only confirm what you can and cant do so just wondered if anyone has any imput/suggestions before I contact them,

Thx

taxing

Hi

Best advice is to go to a good local accountant as the money (headaches and heartaches) he/she will save you will be worth their weight in gold.

Yours is already a stressful occupation (so save yourself from a heart attack) and one which is considered 'easy pickings' (cash receipts) by HMRC if not properly represented.

An accountant will keep you straight with the rules and regulations and will also be able to offer you insurance cover for that (almost inevitable) tax enquiry.

Fellow instructors can probably give you sensible recommendations of good accountants in the area: those with knowledge of driving schools/franchises etc.

Bets of luck.

Regards