Car question plus very simple question

sussexrob · Apr 25, 2009

Hi Everyone

I purchased a £3k second hand car 2 months ago for personal use but would like to use it for business use now. What's the latest regarding claiming against tax when I complete my tax return near the end of this year? Can the cost be set against my £10k income as mentioned below?

This is a very simple question so apologies it is very basic, I am learning very quickly.

Say in the last financial year I earnt £13,000 with outgoings being £3,000

Does this mean I pay tax on the remaining £10 so at 20% would pay £2000?

Many Thanks for your help, I would just like the peace of mind i have my figures correct in my head.

Rob

crossdaz · Apr 26, 2009

It's probably simpler to just claim the basic mileage allowance.
Look it up for the facts but from memory I think it's 45p a mile up to the first 10,000 miles and then 10p a mile thereafter?

(From memory - check the hmrc website!!)

Make sure that you can account for any mileage claimed though, I've been investigated twice on this issue. You'd be surprised how petty these guys can be. In both instances I'd under-claimed, ironically enough

)
If you just want to claim a capital allowance it becomes complicated - you have to write off so much each year and then calculate expenses separately? For a £3,000 car in 2 months I'd guess the sums are negligible?

sussexrob · Apr 26, 2009

Cheers for your reply

the milage im not worried about, most of the work is in the same town as I live in so to deduct petrol etc isnt worth it , not until i hopefully expand it

The capital allowances would be where i would be heading. I realised earlier i have Teach Yourself Understanding Tax for Small Businesses by Sarah Deeks but never read it until now. It says you can claim 25% of the cost, 50% of that as its used for half business and half personal which comes to £375

Sorry, waffling. I think i will phone them on monday and ask

Cheers again

Rob

crossdaz · Apr 26, 2009

sussexrob said:
Sorry, waffling. I think i will phone them on monday and ask

Look on the HMRC website for travel and mileage expenses. All the info you need is there somewhere, although not always easy to find. It's cheaper than being on the phone all day at least

taxattack · Apr 27, 2009

sussexrob said:
Cheers for your reply

the milage im not worried about, most of the work is in the same town as I live in so to deduct petrol etc isnt worth it , not until i hopefully expand it

The capital allowances would be where i would be heading. I realised earlier i have Teach Yourself Understanding Tax for Small Businesses by Sarah Deeks but never read it until now. It says you can claim 25% of the cost, 50% of that as its used for half business and half personal which comes to £375

Sorry, waffling. I think i will phone them on monday and ask

Cheers again

Rob

The Capital Allowance is now 20% for cars, so the claim would be £300. That is the equivalent of 750 miles at 40 p per mile (first 10,000 miles, 25p thereafter).

If you're claiming 50% business, you will need mileage records to support the claim - simple mileage calculation might be easier, although you can alternatively claim the percentage of running costs, as well as CAs.

Chris

taxattack · Apr 27, 2009

sussexrob said:
Hi Everyone

This is a very simple question so apologies it is very basic, I am learning very quickly.

Say in the last financial year I earnt £13,000 with outgoings being £3,000

Does this mean I pay tax on the remaining £10 so at 20% would pay £2000?

Many Thanks for your help, I would just like the peace of mind i have my figures correct in my head.

Rob

There will be 8% Class 4 NI as well as 20% tax, and don't forget the payment on account.

Have you registered for Class 2 NI? Should be done within 3 months of starting self-employment.

Chris

MyAccountantOnline · Apr 27, 2009

taxattack said:
The Capital Allowance is now 20% for cars, so the claim would be £300.

Chris

Just to clarify/add - its 20% writing down allowance if the car emissions are 110gm to 160gm, 10% if 161gm upwards and 100% if under 110gm.

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Car question plus very simple question

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