Car purchase advice

Discussion in 'Accounts & Finance' started by Mattatooi, Mar 7, 2018.

  1. Mattatooi

    Mattatooi UKBF Newcomer Free Member

    2 0
    I am a Freelance sound engineer, who is a sole trader. I am not VAT reg. I do my tax return online myself, as its relatively straight forward. I do not deal with stock etc as all my income is just for my personal services.

    I need to purchase a new car as my existing one has been wrote off in accident. A few questions.

    1. If i buy car outright, what exactly can I claim back in my tax return?
    2. If I buy car outright with part of it on a bank loan, what exactly can I claim back in my tax return?
    3. I owned the vehicle before starting the business and as such have never claimed for purchase for it. I currently claim on the per mile method for car expenses. What do I do with the insurance money I will receive? Is this an income and as such taxable?? How does that work?

    Sorry if its been asked before, but in researching a lot of advice I am finding is quite old and it looks like rules have changed recently on what I can and cant claim. I could be wrong!

    Thanks for your time
     
    Posted: Mar 7, 2018 By: Mattatooi Member since: Mar 7, 2018
    #1
  2. Scalloway

    Scalloway UKBF Legend Free Member

    13,685 2,942
    1. You can claim the business proportion of running costs plus the business proportion of capital allowances. HMRC guidance on capita allowances is here.

    https://www.gov.uk/capital-allowances/business-cars

    2. You can claim the interest on the loan

    3. If you didn't claim the cost of the car for tax purposes the money you receive from the insurance company isn't taxable.
     
    Posted: Mar 7, 2018 By: Scalloway Member since: Jun 6, 2010
    #2
  3. Mattatooi

    Mattatooi UKBF Newcomer Free Member

    2 0
    Thank you. So basically, its probably better for me to just continue to use the per mile method? If I read that correctly I then can not claim anything in the outright cost except for loan interest ?

    As my business miles are around 8-10k per year, it doesnt make sense to write the purchase down as capital allowance as you get so little (18% for car less than 130gm emissions) and thats before reducing it for personal use. Or am I reading this wrong?

    Thanks
     
    Posted: Mar 7, 2018 By: Mattatooi Member since: Mar 7, 2018
    #3
  4. Scalloway

    Scalloway UKBF Legend Free Member

    13,685 2,942
    If your sums show it is better using the mileage rate then carry on using it. You can only claim the business proportion of the loan interest.
     
    Posted: Mar 8, 2018 By: Scalloway Member since: Jun 6, 2010
    #4