Low co2 vehicles
Discussion
Until March 2008 good old Gordon Brown is offering 100% capital allowances for low CO2 vehicles (120mg or less) on vehicles costing over £12000.
I bought an Audi A2 TDi under the scheme in 2004 on the advice of my accountant thinking it was a good deal, but now I have come to replace it and think about another low co2 car I have started to wonder if it is and can't get my head around it.
So, I buy a new car for £12,000, and get the 100% capital allowance this year. Wouldn't I normally get the allowance anyway over 3 years? If so, what I am really saving? Surely I am just reducing CT this year, but paying it in years 2 and 3?
Over the life of an asset, you tend to get the same value of Capital Allowances - no matter what rates are applied to it. When the asset is disposed of, the proceeds on disposal are offset against the tax written down value and a Balancing Allowance or Balancing Charge applied.
High rates of First Year Allowances give an accelerated relief in the early years of ownership - which may be desirable for cash flow reasons or for keeping taxabnle profits within lower tax bands.
But what the Chancellor giveth, he also tends to taketh away.
High rates of First Year Allowances give an accelerated relief in the early years of ownership - which may be desirable for cash flow reasons or for keeping taxabnle profits within lower tax bands.
But what the Chancellor giveth, he also tends to taketh away.
Eric Mc said:
Over the life of an asset, you tend to get the same value of Capital Allowances - no matter what rates are applied to it. When the asset is disposed of, the proceeds on disposal are offset against the tax written down value and a Balancing Allowance or Balancing Charge applied.
High rates of First Year Allowances give an accelerated relief in the early years of ownership - which may be desirable for cash flow reasons or for keeping taxabnle profits within lower tax bands.
But what the Chancellor giveth, he also tends to taketh away.
High rates of First Year Allowances give an accelerated relief in the early years of ownership - which may be desirable for cash flow reasons or for keeping taxabnle profits within lower tax bands.
But what the Chancellor giveth, he also tends to taketh away.
Too true!
I don't think it is worth restricting my choice for the cash flow advantages, expecially as it seems that the vehicle has an upper sealing of £12,000 so even if they still made the Audi A2 it would be out of the price range, and the Toyota Prius definitely is.
I think the A2 has to go (Christmas presents fell on the dog because we were packed to the gunnells). Ended up with 2 dogs in the footwell for 100 miles.
Thing is, it will cary a tax liability if I sell it now won't it, aswe had the 100% allowance in our 2003/4 year instead of the usual 25%?
We have just finished 2005/6, so we have had 3 of the 4 years over which it would normally be written down as a capital allowance? Do I take it that it will now be liable to tax on disposal, minus 3 years of capital allowances (ie 25% of the £7,500 it is now worth)?????..or have I got that calculation wrong?
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