Self Employed - Car

Options
lisajayne1
lisajayne1 Registered Posts: 55 Regular contributor ⭐
in Business Tax
I have a client who has a car on finance (will not own the car at the end) She has said that she uses it full time for business, however she does take it home and uses it for travel back and forth to her shop. Should I use a nominal percentage for personal use, or take her word that it is 100% business expense? (not sure if there is an unwritten rule for such a small amount of personal use). She is not vat registered so no implications there.
My client is self employed, sole trader and runs a shop. She also claims the insurance and other car related expenses.

My other question is .. (cheeky I know) I have another self employed client who was using simplified expenses to claim for his car.. Mileage. He now wants to buy a new vehicle as his company has grown and claim a capital allowance on it. Can he change the method in which he claims for his vehicle? can you claim capital allowance (WDA) if you are self employed / sole trader
Both the above are on a cash basis of accounting

Interested to see how practices deal with the above

ManyThanks

Comments

  • lisajayne1
    lisajayne1 Registered Posts: 55 Regular contributor ⭐
    edited August 2017
    Options
    @Mickdundee Thank you for the clarification of Client 1 .. I agree. She does have another car, however I feel some personal use would be just.

    Client 2 - is a sole trader -

    Cars and other equipment - From HMRC
    https://gov.uk/simpler-income-tax-cash-basis/income-and-expenses-under-cash-basis

    "If you buy a car for your business, you can claim the purchase as a capital allowance (but only if you’re not using simplified expenses to work out your business expenses for that vehicle).
    Unlike traditional accounting, you claim other equipment you buy to keep and use in your business as a normal allowable business expense rather than as a capital allowance."



    However I was always under the impression you couldn't use Capital Allowance & Cash basis, but the above quote/link from HMRC reads otherwise. Hence I was looking for some confirmation??

    Also are you able to swap from simplified to then exact cost method?
  • burg
    burg Registered, Moderator Posts: 1,441 mod
    Options
    In scenario 2 you may swap methods as they are changing vehicle. A change of vehicle is the only time the method can be changed. Again I agree with Mickdundee that I have very rarely seen the exact cost method be beneficial over mileage.
    Regards,

    Burg
  • lisajayne1
    lisajayne1 Registered Posts: 55 Regular contributor ⭐
    Options
    Thank you @burg I thought @mickeymacca was talking about cash accounting as apposed to traditional !!
    Thanks for clarifying the change off accounting technics regarding the cars. I just kept seeing you can't swap
  • gwenb
    gwenb Registered Posts: 42
    Options
    Interesting topic. More can be found here: https://www.gov.uk/government/publications/cash-basis-treatment-of-capital/reforming-the-cash-basis-expenditure-rules#detailed-proposal

Categories

Privacy Policy