confused about the private use of the business car(Unit 18)

carolyn

Hi,

I am struggling in the studying of UNIT18.
I am confused about the private use of the business car.

I am wondering when we need to deduct the part of private usage of the business car when calculating capital allowance.
On page 382 of Kaplan text book(2009), it says "there is no restriction for private use of the car by the managing director" in Activity 7. So my understanding is that we do not need to deduct the private use of car if a managing director uses it when we calculate WDA. In activity 10 , it say "there was 10% private use of both cars by employees" , not mention managing director.however, in the answer, 10% of the private use is not deducted. why?

In the past paper of Jun 2009, task 1.1 , it says :

emily's car --40% private usage
Car for Ismalil Ali ---20% usage.
(They should be the owner of the business.)

In the answer, they are calculated separately, and percentage of private use is deducted.

So I am confused how to deal with the part of private usage of the business cars when calculating WDA.

many thanks.

Carolyn

Marg22

Hi Carolyn

I think you are getting confused with the different types of companies. For instance a LTD or PLC would be able to claim full WDA and a director is just considered to be an employee. All the employees are taxed on the benefit through their own personal tax, so the company can claim full allowance.

The % not allowed for private use is for partnerships or sole traders were the actual partner uses the vehicle for private use. It does not apply to any of his employees because they will be taxed separately as benefit in kind.

Hope this helps a little

Marg

carolyn

Your explanation is quite clear. I understand. thanks a lot.