I am about to start doing the books for a driving instructor who has just started. He had bought a car on finance (px) but has now sign written it to use for business use.
Is capital allowance claimable and the interest on the finance charge?
It is more than likely I will just do mileage allowance but am curious to know the answer.
if your client's new car has dual control, then it is not treated as car for capital allowance purposes, so you can claim capital allowance- as if it's plant and machinary.
They can claim value of car using AIA (annual investment allowance) on invoice value of car, during tax year when the car became a driving instructor car. (or pro rata AIA to % of business use) .
interest element on finance charge will be expensed every month (if they are paying in monthly installments).
interest element on finance charge will be expensed every month (if they are paying in monthly installments).
But if the loan is a Hire purchase loan, the interest on the loan may be capitalised and the full amount may be claimed in the first trading period of the life of the loan.
