I've yet to come accross a case where a business owner is better off with the car in the business than charging the business 45p per mile (for the first 10k & 25p per mile thereafter).... Such of course assumes that the business is turning over less than the VAT threshold.
Taking this as a hypathetical question (or that the self employed individual is over the applicable VAT registration limit of the time) then if the car was introduced to the business in 2010 then the value of the asset is its market value as at that date and it will be capitalised using the method applicable when introduced to the business, not when the asset was new.
HTH,
Shaun.
p.s. edited only for spelling (which was so bad that even I noticed it, lol)
-- Edited by Shamus on Sunday 17th of March 2013 12:22:56 PM
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I have just been reading the HMRC leaflet on capital allowances. It states that the claimable allowances for cars bought before 6/4/09 are based on its cost.
My question is, if I as an individual, buy a car in 2008 and then in 2010 become a sole trader and define the car as an asset, is the asset treated as being bought before 2009, (when I purchased it), or after 2009 when I started trading?
I agree with everything Shamus says. Go for the mileage allowance. You will probably incur extra expenses of around £2,000 which will save you tax and national insurance of around £600 if your a basic rate taxpayer.
Just out of interest, if you went for the other option then you would claim capital allowances on the open market value of the car at the commencement of trade (which you can get from Glasses Guide).
Thankyou both, Just to confirm, if a sole trader took the option of claiming 45ppm, he would not be able to claim capital allowance (depreciation) on the car or any repairs as this would be covered by the mileage rate? Thanks, Mike I don't know about you but I'm finding that the more questions that I ask, the more I need to ask!
I don't know about you but I'm finding that the more questions that I ask, the more I need to ask!
Welcome to accountancy. lol.
Yes, the 45p pm is full compensation for use of one's own car. The only additional item thwat may be claimed on top of that is for parking which is not included in the 45p pm.
kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
Hello Shaun, Thanks for your replies. Just a couple of points; I have bought the taxation book and so far it is doing a good job of blocking the draught under my living room door! But it does look readable. 1) Can car insurance still be claimed separately? 2) do you stop paying nic after a certain age, or if one keeps working does one keep paying? 3) I rent a property out and use a solicitor to calculate my tax. He allows me to claim for working out my rental income and tax due, but does not allow me to claim for completing my tax return. Why is this? If one ran a business could one claim for both? (In future now that I can add up, I will be completing my own accounts).
I have looked for the answers in the taxation book but so far have not found them. I also ordered the ACCA P6 but it has been sent on a dvd so I will have to get it replaced.
I have probably broken several forum rules by asking multiple questions. Sorry, have a good weekend.
I have bought the taxation book and so far it is doing a good job of blocking the draught under my living room door! But it does look readable.
lol. After a year that really is all that tthey are good for.
1) Can car insurance still be claimed separately?
No, the mileage covers all costs. It should be considered as full compensation for the business using your car. The only additional cost that you can claim for is parking tickets (the one's to park, not the one's where you've been naughty)
2) do you stop paying nic after a certain age, or if one keeps working does one keep paying?
Class 1 stops when you reach pension age.
Class 2 stops when you have finished paying any contributions due by the time that you reach retiremet age
Class 4 stops from the start of the tax year after the one in which you reach state retirement age.
I know that there are some semantics in there but the simple answer is that NI stops at state retirement age even if still working.
3) I rent a property out and use a solicitor to calculate my tax. He allows me to claim for working out my rental income and tax due, but does not allow me to claim for completing my tax return. Why is this? If one ran a business could one claim for both? (In future now that I can add up, I will be completing my own accounts).
The rental income is a business. The rest of the tax return is personal. Only business expenses are allowable. Some service providers are stricter on the division of personal and business than others but strictly speaking the treatment is correct.
I have looked for the answers in the taxation book but so far have not found them.
The books not a one stop solution but it gives you the framework within which to understand how and why taxes are applied. The issue with these books is that the index doesn't often point you to the right paragraph even though it is within the book. (That said, the index in the Melville book is pretty good).
I also ordered the ACCA P6 but it has been sent on a dvd so I will have to get it replaced.
The course is a program run on your PC the same as any other bit of software. My assumption was that your PC would be able to read DVDs.
I have probably broken several forum rules by asking multiple questions. Sorry, have a good weekend.
No worries Mike. Hope that the above helps,
Regards, Mike
Responses embedded above.
kind regards,
Shaun.
__________________
Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
