Self employed car claim confusion

Jimbo30003000

Hi all any advice appreciated on the below;

I have been self employed before so I am experienced in the whole process of expenses etc, etc. My current role involves me using my car just for business. I have a loan on the car. My query is instead of the 40p a mile system I believe HMRC allows plant machinery as the car would be classed to be claimed and depreciated each year. I bought the car about a year ago, can I still include this now into the business?, do I claim the value I bought it for and include the total amount of credit as the price and depreciate accordingly or because I already owned it can I not class it as a large business expense.

I bow to your greater knowledge.

ceeforcat

The amount brought into your capital allowances claim is the value at the time it has been brought into the business - a copy of an independent valuation would be useful to have here!

You can claim Capital Allowances on this value in order to reduce your taxable profit.

The interest payable under HP for this car can be claimed as a separate expense in your profit and loss account.

Jimbo30003000

Thank you very much for this, it answers my question exactly, many thanks again.:beer:

ceeforcat

No problem -just to clarify - the tax free mileage rate is 45p per mile on first 10000 miles since 6th April 2011.

Jimbo30003000

Oh thanks again. So if I am almost correct, I get my car valued at say a poor 7k, I include a depreciated percent of this for the first year based on the cars CO2 emissions, so for example -20% of the value I can claim the other 80% as an expense for year 1 etc, etc, reducing each year.

ceeforcat

Not sure that you have a full grasp of this-

If the car cost £20000 and is less than 160g/km (more than 100g/km), 18% can be claimed in the first year i.e. £3600. There is no other claim allowable for the remaining 82%. The carried forward value £15400 - 18% OF THIS can be claimed in the following year and so on...

(the rate was 20% prior to 6th April 2012)

ceeforcat

Perhaps this will help - page 11

http://www.hmrc.gov.uk/helpsheets/hs252.pdf

Jimbo30003000

Ah yes you were right I did not understand at all, I had it backwards. So really I need to calculate if my mileage claims would be greater than the 18% of my car in year 1 and 2 and 3..... Or with the depreciation claim do I claim full fuel expenses back. I ask as the car is probably worth no more than 7k so the deductable amount would not be huge but potentially my mileage may be.

Nicola_Ed

Hi - I think you can only change the basis that you claim tax relief for your car expenses when you change you car. See below from HMRC website.
Who may use a mileage rate?

Taxpayers can compute their expenses using a fixed rate per business mile if the annual turnover of their business is less than the VAT registration threshold when they first use the vehicle.
We use the VAT registration threshold as a convenient limit whose real value is regularly reviewed. Our practice has no application to VAT accounting and does not affect existing VAT rules and practices. The use of the VAT registration threshold may be reviewed if there is an increase in the threshold substantially in excess of the rate of inflation.
Taxpayers can only use the mileage rate basis if they apply it consistently from year to year. They can only change to or from an ‘actual' basis when a vehicle is replaced.
If the turnover of the business increases and exceeds the VAT registration threshold, then the taxpayer should continue to use the mileage rate basis until the vehicle is replaced.
If there is a change in the VAT threshold, then the taxpayer should continue to use the same basis until the vehicle is replaced.

ceeforcat

http://www.hmrc.gov.uk/bst/advice-team-events/motor-expenses-handout.pdf


jimbo - your choice is - capital allowances plus business motor expenses

or

Mileage claim

Not a mixture of both.

Jimbo30003000

Hi all, hoping for yet more expert advice.

I am working for a German company, I work from home for three weeks of every month and I travel overseas for the remainder. I innitially went onto a Direct National Insurance scheme but I am now looking to reclass myself as a self employed consultant, the organisation has no problem with this but also no epxerience. They have suggested if this is the case then all expenses have to be paid first by myself then claimed back, flights to Australia, Brazil etc are too much expenditure for me.

Is there a way I can be classed as a consultant allowing me to claim back office and car expenses in the UK but also have intenrational travel expenses paid by the company??:(