FYA allowance question - Business Tax - Practice assessment 1 - Question 1.3

VijiVijins

Hi guys, hope you can help please. In Business Tax - Practice assessment 1 on the AAT website question 3 there is Car 2 addition (low emissions - eligible for FYA) and it is given 21850 allowance (full cost allowance) but there is a note that it has 25% private use.

Shouldn't allowance be calculated as 21850 x 75% = 16388? I am missing something?

PeterC

What you say would be correct if the car was being used by the proprietor. Presumably, the Contract Manager is an employee.

Pian32

As Peter says the adjustment occurs for owners and not employees.

Just wanted to add that in personal tax the employee would still need to include it as a taxable benefit

VijiVijins

Thanks very much guys, I completely missed that point

PeterC

You're welcome

katelowes

Hi, does anyone know how to get the allowance figures of 940 and 897?

Pian32

Hi Kate

It's to do with the private use of the owners vehicle. You can only claim the business %age if you are the owner.

Balancing = 1175 *0.8 = 940
WDA = 1121 * 0.8 = 896.8 (rounds up) 897

katelowes

Thank you, is there a reason on why it is 80% as private use is 25% so in theory should it not be 75% business use?

Pian32

The vehicles that the reduced amount applies to are 20% private use. The 25% is the managers car.

katelowes

Thank you! Makes sense