Ive got a friend who is a driving instructor, she purchased a car this year for her work. She asked me about allowances and i havent mentioned anything yet, thought id get it checked out first on the forum.
My understanding is that she can capital allowances on her car and deduct this from her amount of tax payable. Becauses she is self employed therefore her business is small, would she be entitled to 100% capital allowance?
She has said her income is very low as she works hours to suit her childrens school. If her income is less than the capital alowance amount, she will have a loss, and can carry that against her following years income?
am i on the right track or have i totally diverted
Motor vehicles are treated differently to plant and machinery, and there is a maximum claim for motor vehicles of £3,000 for capital allowances per annum. If your friend uses the car for both business and personal travel there may be a personal add back on this claim.
If she makes a loss, yes, it is possible to carry this forward to offset against future profits.
Dustin
__________________
"People who are exceptionally good in business arent so because of what they know but because of their insatiable need to know more"
There is a 100% allowance for Plant and Machinery, and theres also an Annual Investment Allowance on the first £50K of investment that doesn't fit into the P&M allowance. Other plant and machinery receive 20% writing down allowance, with the cars allowed a max of £3K.
Yes optional extras should be capitalised. However they would be included under Motor Vehicles as opposed to P&M.
Dustin
__________________
"People who are exceptionally good in business arent so because of what they know but because of their insatiable need to know more"
