Motor Cars (Taxis) - Capital Allowances

System
System Posts: 100,534 🤖 Admin 🤖
edited 12:08PM in AAT member discussion
How would i deal with the following situation?

A taxi driver has a year end of 05-04-06.
In Feb 06 he buys a new car for £6000. He keeps hold of the old car worth approx £400.
In the new tax year i.e April 2006 he spends about £300 on the old car which includes £100 on the taxi license. This car is then sold for £400. How would you calculate the capital allowances in this situation for year ending 05-06 / 06-07?

I appreciate any answers.

Comments

  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Motor Cars (Taxis) - Capital Allowances

    Capital allowance for 05/06 will be calculated using the WDV multipy by 25% for each year .the addition of the new car will be under pool as it is under £10k andto not qualify for FYA.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Motor Cars (Taxis) - Capital Allowances

    I would de-pool the new car, which is allowable for 4 years. If the car is sold within this time, then a Balancing Allowance may arise, which would not occur in the pool.

    For 2006/07, the licence will be a revenue expense. If the car is sold for £400, then this will usually be the value for the capital allowances claim. It depends on the WDV and whether the car is de-pooled when calculating what the capital allowances/charges will be.

    Also, if there is any private use of the cars, then they must be de-pooled.
  • System
    System Posts: 100,534 🤖 Admin 🤖
    Re:Motor Cars (Taxis) - Capital Allowances

    I would agree with the above treatment for the revenue expenses and the disposal of the old car.

    However, a car provided wholly or mainly for hire to or the carriage of members of the public in the ordinary course of a trade qualifies for first year allowances.

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