Motor vehicle capital allowances
Discussion
I recall the maximum annual capital allowance that can be claimed against a motor vehicle is £3000.
Do HMRC just keep allowing £3000 a year until all the value is gone, or do they stop at some point, or do they carry on giving an allowance even when they have reached the purchase value?
We have an Elise that we have had for almost 3 years now but I was wondering if they would give us further capital allowances past the end of the third year?
The £3,000 maximum allowance applies to "Motor Cars" (not Motor Vehicles).
You just keep claiming the £3,000 until the regular 25% annual allowance starts producing lower figures. As the allowance is calculated on a "Reducing Balance" basis, it will never reduce to a completely "Nil" balance - there will always be an ever decreasing residual Written Down Value.
When the vehicle is disposed of, the proceeds on sale/disposal/insurance claim etc are offset against the Written Down Value brought forward and, if a surplus is generated, this is added to the business profits as a "Balancing Charge" and, if a deficit is generated, a final "Balancing Allowance" is claimed against the business profit.
If the car is "removed" by the proprietor without actually paying the business for it, then a "market Value at Date of Disposal" should be substituted for the "Proceeds on Sale".
Don't forget that the Revenue expect whatever claims re being made for a particular car, that they should be restricted by the "Private Useage" fraction.
Also, from 6 April 2008, the annual allowance will be reducing to 20%.
You just keep claiming the £3,000 until the regular 25% annual allowance starts producing lower figures. As the allowance is calculated on a "Reducing Balance" basis, it will never reduce to a completely "Nil" balance - there will always be an ever decreasing residual Written Down Value.
When the vehicle is disposed of, the proceeds on sale/disposal/insurance claim etc are offset against the Written Down Value brought forward and, if a surplus is generated, this is added to the business profits as a "Balancing Charge" and, if a deficit is generated, a final "Balancing Allowance" is claimed against the business profit.
If the car is "removed" by the proprietor without actually paying the business for it, then a "market Value at Date of Disposal" should be substituted for the "Proceeds on Sale".
Don't forget that the Revenue expect whatever claims re being made for a particular car, that they should be restricted by the "Private Useage" fraction.
Also, from 6 April 2008, the annual allowance will be reducing to 20%.
Eric Mc said:
The £3,000 maximum allowance applies to "Motor Cars" (not Motor Vehicles).
You just keep claiming the £3,000 until the regular 25% annual allowance starts producing lower figures. As the allowance is calculated on a "Reducing Balance" basis, it will never reduce to a completely "Nil" balance - there will always be an ever decreasing residual Written Down Value.
When the vehicle is disposed of, the proceeds on sale/disposal/insurance claim etc are offset against the Written Down Value brought forward and, if a surplus is generated, this is added to the business profits as a "Balancing Charge" and, if a deficit is generated, a final "Balancing Allowance" is claimed against the business profit.
If the car is "removed" by the proprietor without actually paying the business for it, then a "market Value at Date of Disposal" should be substituted for the "Proceeds on Sale".
Don't forget that the Revenue expect whatever claims re being made for a particular car, that they should be restricted by the "Private Useage" fraction.
Also, from 6 April 2008, the annual allowance will be reducing to 20%.
You just keep claiming the £3,000 until the regular 25% annual allowance starts producing lower figures. As the allowance is calculated on a "Reducing Balance" basis, it will never reduce to a completely "Nil" balance - there will always be an ever decreasing residual Written Down Value.
When the vehicle is disposed of, the proceeds on sale/disposal/insurance claim etc are offset against the Written Down Value brought forward and, if a surplus is generated, this is added to the business profits as a "Balancing Charge" and, if a deficit is generated, a final "Balancing Allowance" is claimed against the business profit.
If the car is "removed" by the proprietor without actually paying the business for it, then a "market Value at Date of Disposal" should be substituted for the "Proceeds on Sale".
Don't forget that the Revenue expect whatever claims re being made for a particular car, that they should be restricted by the "Private Useage" fraction.
Also, from 6 April 2008, the annual allowance will be reducing to 20%.
HMRC make things so straight forward don't they.
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