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TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15915
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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hellol i have typed a question a few days ago but received

Resolved Question:

hellol i have typed a question a few days ago but received no answer. I wanted to know self employed person can you buy a car and amortize or take the entire cost up to £25k as an expense in one year? how do you treat any personal usage?
As i had asked this question a few days ago and my free trial seems to run out by the 31st it would really be appreciated if you could answer asap.
Thanks so much.
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
.

I'm afraid that Annual Investment Allowance whereby the whole cost of an asset can be claimed in one year does not apply to cars.

Take a look here on what capital allowances are available . Any personal use reduces the allowance that may be claimed.

I hope this helps but let me know if you have any further questions.
Customer: replied 2 years ago.

Thanks. But this is not clear. Otherwise i would not have asked the question. So if we buy a car (used) with emissions of more than 130mg how much can we take as allowance per year as self employed? Is this 8% of the cost per year (assuming we have no self usage)? any other limitations? Thanks. Annette

Expert:  TonyTax replied 2 years ago.
The notes and examples here may be clearer.

If the car has CO2 emissions of more than 130g/km, the capital allowance rate is 8% per annum on a reducing balance with a disallowance use. If the car cost £25,000, the writing down allowance in year 1 would be £2,000 less any private use. The allowance two would be £1,840 less any private use (£25,000 - £2,000 x 8%). The allowance three would be £1,693 less any private use (£25,000 - £2,000 - £1,840 x 8%). You continue like that until the car is sold or removed from the business.

As you will read here, you cannot reclaim any of the VAT on the car purchase price if there is private use.
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