Capital Allowances on Cars Flashcards
Introduction
When are Capital Allowances on Cars Unavailable?
Where Flat Rate Motor Expenses are Claimed.
Calculation
The Capital Allowance Rates for Cars are:
- 18% in the General Pool;
- 6% in the Special Rate Pool.
Calculation
What Determines Which Pool Each Car Should be in?
The Car’s CO2 Emissions.
Calculation
When Can First Year Allowances be Claimed on Cars?
If the Car is New and Unused with Zero CO2 Emissions.
Calculation
First Year Allowances Can be Claimed on Cars Purchased Before:
1 April 2025.
1 April 2021 Where CO2 Emissions Don’t Exceed 50g/km
Additions
When Might a Car’s Cost Not be VAT Inclusive?
Where the Trader is VAT Registered and the Car is Privately Used.
Additions
When Would the Market Value of a Car be Included in the Capital Allowances Computation?
If the Car was Purchased for Private Use Prior to Being Used for Trading Activities.
Disposals
A Car’s Disposal Value is Usually Sale Proceeds Received. Market Value is Used Instead if:
- Sold Less Than Market Value to Someone Who Cannot Claim Capital Allowances;
- Given Away;
- No Longer Used in the Business.
Disposals
What is a Car’s Disposal Value Limited to?
Original Cost.
Private Use
What Pool Should Cars With Private Use Go?
A Single Asset Pool.
Hire Purchase
How is Relief Obtained for Each Element of a Hire Purchase Agreement?
Capital Allowances Can be Claimed on the Capital Element; The Interest Element is Deductible From Trade Profits.
Small Pool Balances
A Pools Full Amount Can be Written Down if:
- The Balance Doesn’t Exceed £1,000;
- There is No Private Use.
Lessens The Admin Burden for Small Business
Balancing Adjustments
A ‘Balancing Adjustment’ Arises Where Either:
- A Private Use Car is Sold;
- The Business Ceases Trade.
Balancing Adjustments
When Does a ‘Balancing Charge’ Arise?
Where Sale Proceeds (Limited to Cost) Exceed The Tax Written Down Value.
Cessation of Business
What is Not Allowable in Accounting Period of Cessation?
WDAs Nor FYAs.
