Sole trader allowable car expenses

Yes - including Capital Allowances.

Yes, again - same personal restriction, also restriction to 3000 for cars costing over 12,000.

In message , Grobag writes

Do you use an accountant? If so, they should be able to help - and also make sure you claim all the reliefs that are available.

I'm almost certain that you can claim 10% of all running costs, and I think you can depreciate all of your car by 25% p.a..

You may just find it easier to claim 40p/mile which covers all the above and is the maximum allowable (1600cc car) without incurring tax etc. 10/week petrol ~ 60miles x .40p/mile = 24.

Check out Fixed Car Profit Scheme.

Not sure if you can do this and FCPS - use your accountant.

There is no restriction on engine size - the rates are 40p per mile for the first 10,000 miles and 25p per mile thereafter. You cannot claim CAs on top, only interest to purchase the car.

Yes, badly phrased. 40p is the max for 1600cc and I thought it was higher for bigger engines but seems not. It didn't look like the OP was going to get anywhere near the 10,000 miles.

Useful to know.

OK thanks for the input guys. I don't use an accountant now, that's why I asked here. I have in the past, and he turned out to be probably the worst one in the UK. My affairs are usually simple so I do it myself.

Do I understand then that I am free to choose between the 40p a mile system, or the business proportion of all actual running costs?

Also Doug could you clarify please -- first you said I can claim CAs then I can't. How about my existing car for the year 2004/5 (finalising the SA return at the moment). Had it 3 years - can I introduce it as a capital allowance now for 2004/5?

Thanks Grobag

It's an Either/Or option - either mileage + loan interest or the business % of ALL motoring costs including Capital Allowances. However, you cannot chop and change between the two options. You can change when the vehicle is disposed of.

You cannot use the mileage option if your turnover is over the VAT registration threshold.

Presumably in the first option you can only use the business % of the loan interest, and in the second option loan interest is also a part of "all motoring costs".

Yes & Yes.

Is that a limitation for sole traders only? It certainly doesn't apply to directors of ltd companies.

It's not the same thing. If you use your own car for company business, it's mileage (no loan interest) or nothing.

OK I am VAT registered with t/o exceeding 60k pa so it's option 2 for me then.

If I pay cash for a car (no loan), can I claim a notional interest, if so how much? Bank base + 1?

Also, in my particular existing circumstances, I have neglected to claim the CA for a car owned (bought for cash) for 3 years, can I now (forgetting lost CA for 2 years) introduce it for 04/05 (say at current market value) as a CA?

Thanks Grobag

1. No. Notional interest is not deductible. If you have other non-allowable borrowing(s), it might be advantageous (depending on interest rates, redemption penalties etc) to use the cash to pay down/off these loans and borrow to finance the car purchase.
2. It might be possible to claim the missing CAs, but it might be better to claim a larger Balancing Allowance for the year of disposal, depending on Tax rates etc.

Thanks for the advice Doug. most helpful. BTW are you an accountant?

Grobag