Tax reclaimable on vehicle - S Employed

Lleucu

Help, friend is a self employed gardener.

His van gave up last week and he bought a second hand car for £500 to get buy using his 'saved' tax money.

He was on the short tax form, but has been migrated to online, first return due this January.

He thought that he could include this new vehicle in his tax claim for 2014/15.

I thought that this item could be claimed next year as the purchase was in 2015/16.

Also how is a second hand car for work treated for tax - could it be 100% allowed next year?

Pennywise

Lleucu wrote: »

He thought that he could include this new vehicle in his tax claim for 2014/15.

I thought that this item could be claimed next year as the purchase was in 2015/16.

You're right, he's wrong. All that matters is what happens during the tax year, no afterwards.

Lleucu wrote: »

Also how is a second hand car for work treated for tax - could it be 100% allowed next year?

No, you can only claim writing down allowance on a car, at a rate of either 8% or 18% per year depending on it's emissions. The only way you'll get 100% is if it qualifies for 100% FYA by virtue of being ultra low emission, electric, etc. The actual amount of business v private use doesn't change this, except of course that proportion of private use reduces the capital allowance claim still further.

He should have bought a van - if it were 100% business use, he'd have been able to claim 100% allowance from his taxable profits.

He also needs to learn that spending money doesn't reduce his tax "pound for pound". The most you get is relief at your marginal tax rate. So if he's paying a combined tax/nic of 29%, even spending £500 on a van would only reduce his tax/nic by £145 at most. Spending £500 on a car would reduce his tax/NIC by only £26 max in the year of purchase.