When you go for the mileage rate method you cant use actual expenditure nor capital allowances. So I take it therefore there is no balancing allowance/charge in the tax return upon disposal/sale. I know it would depend on what the vehicle is sold for but doesn't going for AMAP usually lose out on a potential balancing allowance against tax in the future?
Also I'm dealing with someone where they forgot to record the mileage at different points in the year. The vehicle has been sold and there was no mileage taken at sale, so for 1 tax year we have no idea of mileage. In this situation would you have to take a monthly average from the previous year and use that? I guess you wouldn't be allowed to move to actual for the time no mileage was taken?
The mileage allowance is meant to cover the depreciation aswell as the runing costs. It just seems a little tight as the rates havent been put up for years.
As regards the missing records, i i would take an average from the previous year and use that. If HMRC came knowcking i dont think they would be to bothered as long as it was reasonable. Unless the amount of mileage is high the amount of difference in the tax will be minimal.
Yes, it does seem quite close as you say when looking at individual circs. Its just that with the person I'm dealing with there was a vehicle purchased in the 06/07 year for £3500, using AMAP as the mileage was high that year. The vehicle was scrapped for £50 in the 09/10 year. But using the WDA's from 06/07 would have been a much better outcome in the long run.
06/07 - FYA 50% Plant - £3500 - £1750 07/08 - WDA 25% - £1750 - £437.5 08/09 - WDA 20% - £1312.50 - £262.5 09/10 - Pool Value £1050 less scrap value @ £50 = Balancing Allowance of £1000
So in the long run a £1000 has been lost against. Have I missed something?
