I heard lots of opinion about Capital Allowance, but still make me confused.
I wonder if you can help - how to work out if we buying new company car - what kind of costs (petrol,mot,millage rates etc) we can add under expenses (7xxx), how to claim capital allowance and have we got any flat rate for car's depreciation?
And one more question - what to do if we decided to sell the car (assets) - is that treated as an income?
I add that I am using Sage 50 Accounts at the moment.
I am brand new bookkeeper so I am so sorry if my questions sounds silly but I really want to learn this and make sure I wont be make any mistakes in the future.
I did AAT level 2 & 3, now I am in the middle of level 4.
I was working in small accounts team as a accounts assistant and few weeks ago I get a new job which is more about bookkeeping and some times need a hand.
all running costs of a company car can be expensed with the exception of fines and parking tickets which belong with the driver, not the car.
cars tend to be depreciated through the books on a reducing balance rather than straight line basis. Remember that you need to add that back in the tax calculation.
Capital allowances for cars are based on the CO2 emissions. The level of emissions determins whether the car is allocated to First Year Allowance, General Pool or special rate pool.
Capital allowances are claimed against tax through the companies CT600 (or for self employed through self assessment).
If the vehicle is sold then there will be a balancing charge / allowance dependant upon the sale price against the value of the car (note that the sale must be an arms length transaction. One cannot simply sell an asset cheaply to a freind and claim the allowances).
This is a gross over simplification and I would advise getting a good grounding in tax by reading Taxation by Alan Melville.
p.s. I don't use Sage so cannot help you on software specific elements of your question.
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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.
