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Post Info TOPIC: Capital Allowance Taxi Driver
looby999


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Capital Allowance Taxi Driver
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My client is a self employed taxi driver and has purchased another second hand taxi. Do I add to the main pool and write down at 18% or as it has co2 of 169 does this need to be at 8%.

Also he has a life assurance/critical illness policy that he contributes to monthly, can this be classed as a business expense?

Thanks



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Leger


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If it's a London style cab then he can claim AIA in full.  If not then it's 8% on the reducing balance.

The answer is no on the second question as it must be an expense wholly for business use.



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looby999


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Thanks John that's great. He has a taxi that was bought before 2009 that is being reduced by 18% so will keep new car seperate.
Thanks again

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looby999


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Just another quick question, will I need to pro rata the allowance? Accounting period is April to Match and car was purchased July? Thanks

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Shamus


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Hi Lisa,

yes you will

kind regards,

Shaun.


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looby999


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Thanks Shaun much appreciated. Going back to the critical illness policy if he was unable to work he would have loss of earnings does this then not constitute as a business expense? Thanks

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Shamus


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It all depends on the type of policy, who the beneficiary is and where the payment comes from.

The one where it would be acceptable is something called a key man policy which compensates the business if a key member of staff is unable to work.

No payment is made by the member of staff (it is made bythe business) and the staff member receives no benefit from the policy. However, if it pays out then the business can continue to pay the person from the paymout.

The sort of policy that you are talking about is the wrong sort so I am afraid John is completely correct and your client would not be able to put that through the business because it is designed that they pay into it and they benefit directly from it.

I've actually thought about this one before and to my mind its something that will work with incorporated entities where there is a diference between the business and the person but not with the self employed where the business and the person running it are one and the same.

Sorry, to my mind its the wrong business model and the wrong type of policy.

Kindest regards,

Shaun.

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looby999


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Thanks for your great reply it has helped a lot! The policy is a Decreasing Temporary Assurance with critical illness so I am presuming it is not for the business! Thanks again.

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