Paying Tax and Expenses for Taxi

Yuzo

So i set myself up driving a taxi in the last tax year.

I have made a record of all my earnings and all my costs up to the end of the tax year.

My question is about my biggest expense,… the car.

Do i put the entire cost of the car on my tax return, which would mean me paying no tax for my first year in business…. or do i claim the depreciation? say 18% of the value of the car? … which would spread the cost across multiple tax years. Is it up to me how i claim this?

Thanks.

Jeremy535897

This will depend on the type of the car. Certain low emissions vehicles, and Hackney carriages, can qualify for 100% annual investment allowance on the business proportion (although you can restrict the claim if you are wasting personal allowances by making a full claim). Other cars may qualify for 18% or 6% writing down allowances (reducing balance basis) on the business proportion. See: https://www.gov.uk/capital-allowances/business-cars

Yuzo

My car is a 2015 private hire 97g/km. Purchased October 2022.

So i am guessing i can only claim 6% of the cars value?

Unless there is an exception for cars used as a taxi? It doesnt mention taxis anywhere on the governments website. So im guessing its just classed as a business vehicle?

Thanks.

Jeremy535897

That is correct. Only hackney carriuages are excluded, along with vans and trucks, and a few other exceptions. See:

https://www.gov.uk/hmrc-internal-manuals/capital-allowances-manual/ca23510

Yuzo

Thanks Jeremy. Makes sense now 😅