self assessment - claiming for car purchase

johnboy123

yes... i think what I am asking is can I claim a percentage (only a percentage as its used for personal use too) of the purchase cost of the car as a capital allowance... much the same way I would if a bought a computer or something...

or doesn't it work like this? Basically it would probably be financially better than claiming mileage as I dont do that much

WHA

Sole trader - so no benefit in kind rules apply.

Separate the capital (purchase of the car) away from the running costs (fuel, repairs, tax, insurance, AA, interest etc).

Capital allowances on purchase of car at applicable capital allowances rules then apportioned according to business versus private mileage split.

Running costs - apportion according to business versus private mileage split.

If business mileage is 10% of total, then claim 10% of capital allowances and 10% of running costs.

Alternative (if under VAT threshold) is to use the 40/25p per mile in which case the mileage allowances covers everything (capital and running costs).

If business mileage is significant compared with private mileage and as long as the car is not a cheapie, probably best to go for the apportionment route. However if car is very cheap or the private mileage is significant compared with business mileage, probably better to go mileage rate route. You have to do the calculations and compare each option to work out which is best. Either way you need a proper log of business mileage to prove your claim.

Bean_Counter

Might be best if you read through a couple of things.

Firstly, if you are a sole trader you will (hopefully) be filling in a tax return. The self-employment notes have a couple of examples which I think will be pertinent to your situation. Try this link:

http://www.hmrc.gov.uk/worksheets/sa103-notes.pdf

The notes then refer you to helpsheet IR222 for more info. This is:

http://www.hmrc.gov.uk/pdfs/1999_00/helpsheets/ir222.pdf

Hopefully the examples in these will help.

dejongj

My understanding is that if you go down the capital allowance route (25% for the first year on reducing balance with a maximum of £3000, unless it pollutes less than 120g/km as then you are allowed 100%) for the portion of the car that is used for business use....You then can't combine it with the mileage rate as aforementioned. You then have to keep very detailed mileage records and do it for all the car expenses...

Which was is financially better can't be adviced as the percentage personal vs business use is unknown and also your business mileage is unknown and the value and pollution of the car is unknown....

dejongj

nealnomoney wrote: »

He is a sole trader, there is no mention of a company!!

I totally missed that bit Probably as I don't understand why anyone would want to run as a sole trader....Sure there can be a little less administration, although the example in this thread immediately suggests otherwise...But tax advantages with an incorporation are becomming signification quite quickly at even low turnovers....And I am guessing that when someone can buy a new car the turnover should be pretty decent Anyway that is a bit off-topic...

Cute_'n'_Quirky

dejongj wrote: »

My understanding is that if you go down the capital allowance route (25% for the first year on reducing balance with a maximum of £3000, unless it pollutes less than 120g/km as then you are allowed 100%) for the portion of the car that is used for business use....You then can't combine it with the mileage rate as aforementioned. You then have to keep very detailed mileage records and do it for all the car expenses...

Which was is financially better can't be adviced as the percentage personal vs business use is unknown and also your business mileage is unknown and the value and pollution of the car is unknown....

For 24 years I have claimed Capital Allowances on all my vehicles and also claimed -

petrol
Road fund tax
insurance
repairs
garaging costs
etc

I was allowed 90% for business use

dejongj

Cute_n_Quirky wrote: »

For 24 years I have claimed Capital Allowances on all my vehicles and also claimed -

petrol
Road fund tax
insurance
repairs
garaging costs
etc

I was allowed 90% for business use

If you can proof 90% business use then its worth it indeed, but I bet you have kept meticulous records to get away with that......

Strange though how you state you have claimed this for 24 years, but then in another thread you make a comment that the first 10k is tax free on profit!? For someone keeping such obvious meticulous records I'm confused that you thought that was the case....

Cute_'n'_Quirky

I have been self-employed for 24 years come June. I did home visits in a medical practice all that time. As well as teaching and lecturing all over the World.

I am starting another business altogether and am contemplating becoming a Limited Company.

Now onto the car question.

What meticulous records?

I kept normal business records and all receipts and provided a full balance sheet for the tax office every year.

I only ever kept petrol receipts and claimed petrol allowance with 10% removed for personal use. What is strange about that?

I was out from 9am to 7pm Mon-Fri.
I was then out two nights per week teaching.

That 90% business use was calculated in 1983!

It is usual to have 33 1/3rd for personal use anyway, mine was just a little lower, that was all.

WHA

Cute_n_Quirky wrote: »

That 90% business use was calculated in 1983!

It is usual to have 33 1/3rd for personal use anyway, mine was just a little lower, that was all.

Are you seriously saying that your business versus private mileage has never changed in any year out of the last 24? I take it you have never had an actual tax enquiry into your tax return? It is standard practice upon enquiry to demand a full mileage log to support the business mileage proportion claim - that is what another respondent meant by meticulous records - just keeping the bills isn't enough, you have to be able to prove that your business v private mileage calculations are also fool-proof. The calculation has to be done every year, not just once and then keeping the same proportion. I am also baffled by the suggestion that 33.3% is "usual" - did you get this figure from any official HMRC form or their website. I'm not having a go at you, I am trying to balance your methods against what happens in reality for the benefit of other forum readers so that they are not misled.

Cute_'n'_Quirky

Working from 9am until 9pm doesn't leave much time for private motoring!

Also, at the weekends I do church services all over the country - all tax allowable since I am registered for tax on three businesses.

No, I have not had a tax enquiry and no I have never been asked for mileage.

My mileage on my cars is always over 16K per year, worked out on the petrol price comes out right, so there could be no question on that.

The original suggestion to me, by an accountant (in 1983) , was 33 1/3 % which I knew would be way too much private use for me.

I have seen my own Tax Inspector at my own local office every year for the last four years and have had not one bit of problem.

I am not on the fiddle at all, never have been, every penny has been disclosed.