Self employed / electric car Tax benefits ??
Discussion
HELP !
I'm getting a tad confused about the tax benefits of buying a BMW i3. I'm self employed sole trader not limited company and 50% of car use is work related. Could someone please give me an idea of the tax benefits over 3 years of buying this car. Purchase price is £30k and I'm financing it on a PCP deal.
Thanks.
Phil.
I'm getting a tad confused about the tax benefits of buying a BMW i3. I'm self employed sole trader not limited company and 50% of car use is work related. Could someone please give me an idea of the tax benefits over 3 years of buying this car. Purchase price is £30k and I'm financing it on a PCP deal.
Thanks.
Phil.
pauldavies85 said:
I believe that if the car has below 100g/co2, you can write off up to 100% of the capital cost in one year, so in your case, 50% as this is yr bussiness proportion. The car has to be brand new to do this.
I've done this when the rules where bellow 110g/co2. There is a special allowance for this in your tax return, I'm a sole trader too. You don't need to worry about company car tax etc, that's for company's.
The next tax bracket is 100- 130g/co2, here 18% can be written off on a decreasing scale each year. Thus roughly matches depreciation in the early years, the car doesn't have to be new to do this.
However, with all capital expense, there is the remaining balance when the car is sold or traded in, on which you'll be taxed in that years accounts, eg. If the car was worth 10k in 4 years, that would have to be added into those years profits, though obviously you have had tax benefit on these in the 1st year.
How you finance it is irrelevant, unless it's a lease as your not buying it. PCP really defers a lump of money until a chosen point where you can pay it or trade in. Interest on the finance can be written off also.
I'm not an account btw, but it's quite simple for sole traders - I think the gov website has details on this.
Capital wxpenses aren't the same as investments in plant/equipment/machinery. This is why commercial vehicles can be better as the previous poster says.
Hope this helps
Thanks Paul that's helped me get my head around it a bit more. I'm a sound engineer not an accountant.......I've done this when the rules where bellow 110g/co2. There is a special allowance for this in your tax return, I'm a sole trader too. You don't need to worry about company car tax etc, that's for company's.
The next tax bracket is 100- 130g/co2, here 18% can be written off on a decreasing scale each year. Thus roughly matches depreciation in the early years, the car doesn't have to be new to do this.
However, with all capital expense, there is the remaining balance when the car is sold or traded in, on which you'll be taxed in that years accounts, eg. If the car was worth 10k in 4 years, that would have to be added into those years profits, though obviously you have had tax benefit on these in the 1st year.
How you finance it is irrelevant, unless it's a lease as your not buying it. PCP really defers a lump of money until a chosen point where you can pay it or trade in. Interest on the finance can be written off also.
I'm not an account btw, but it's quite simple for sole traders - I think the gov website has details on this.
Capital wxpenses aren't the same as investments in plant/equipment/machinery. This is why commercial vehicles can be better as the previous poster says.
Hope this helps
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