Loss On Company Car
Discussion
yes...as it is deemed to be an expensive car you will get a balancing allowance for the remaining amount of depreciation suffered when you sell it.
cars ordered after 1 April this year regardless of value will no longer have this so the remaining depreciation will be offset over many years, this is a big change
ETA
you would have had a capital allowance of £3k last year and will have £10k this year
cars ordered after 1 April this year regardless of value will no longer have this so the remaining depreciation will be offset over many years, this is a big change
ETA
you would have had a capital allowance of £3k last year and will have £10k this year
Edited by CaptainSlow on Saturday 31st January 18:51
ok sorry.
when you write the cost of a car off your trading profits you are not allowed to use the depreciation method you use in your financial accounts. there is a prescribed methodology, for this particular car you would have "depreciated" it £3,000 last year (ie reduced your taxable profits by £3,000) if you were to sell it for £15,000 in year two you are able to write off the remaining £10,000 (£28,000 - £3,000 - £15,000). cars bought for less than £12,000 follow different rules as do cars with emissions under 120gkm.
Starting April 1 there will be three rules based on the vehicle's emissions.
sub 110 gkm will be allowed to write the whole cost of the car off in year 1
sub 160 gkm will have an allowance of 20% pa on a reducing balance method. In year of sale the sales proceeds are deducted from the outstanding balance and then 20% of that is taken
above 160 gkm is same as above but only 10%
the lack of taking the balancing allowance in the year of sale will have a big impact on companies. in your case the balancing allowance differential equates to £8,000 (£10,000 - 20% * (£28,000 - £3,000-£15,000))
there is no maximum allowance (currently £3,000 p.a.)
when you write the cost of a car off your trading profits you are not allowed to use the depreciation method you use in your financial accounts. there is a prescribed methodology, for this particular car you would have "depreciated" it £3,000 last year (ie reduced your taxable profits by £3,000) if you were to sell it for £15,000 in year two you are able to write off the remaining £10,000 (£28,000 - £3,000 - £15,000). cars bought for less than £12,000 follow different rules as do cars with emissions under 120gkm.
Starting April 1 there will be three rules based on the vehicle's emissions.
sub 110 gkm will be allowed to write the whole cost of the car off in year 1
sub 160 gkm will have an allowance of 20% pa on a reducing balance method. In year of sale the sales proceeds are deducted from the outstanding balance and then 20% of that is taken
above 160 gkm is same as above but only 10%
the lack of taking the balancing allowance in the year of sale will have a big impact on companies. in your case the balancing allowance differential equates to £8,000 (£10,000 - 20% * (£28,000 - £3,000-£15,000))
there is no maximum allowance (currently £3,000 p.a.)
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