Claiming for new car??

[Hats]

Hope someone can shed some light!! :(

I bought a 7 seater car in this tax year specifically for childminding (otherwise I would have bought something much smaller and cheaper to run!!)

I use the car 95% for work then very occasionallly at the weekend personally (we have another car we use for the family generally!)

Car cost £10,000 am I correct in thinking I can claim 10% of the value as "Writing down allowance" per annum? (so next year I do 10% of £9000 etc?) Can I then claim 95% of all my car bills MOT Insurance Service etc?? I know I then can't claim mileage.

Any advice much appreciated.

H :)

[MrAnchovy]

As you are talking about 10% WDA it looks as though you are already aware of the new arrangements for capital allowances on cars described here (http://www.businesslink.gov.uk/bdotg/action/detail?itemId=1086394511&type=RESOURCES), so just a few comments:


You can only claim 95% of the WDA. The calculation works like this:

Year 1
Cost 10,000
WDA @ 10% 1,000
Balance c/f 9,000

Private use 5% 50
WDA claimed 950

Year 2
B/fwd 9,000
WDA @ 10% 900
Balance c/f 8,100

Private use 5% 45
WDA claimed 855


You need to keep records to support the 95% calculation. It shows you are doing this correctly if you use actual milage figures xxx/yyyy each year instead of rounding this to 95%.

Yes you can claim 95% of all costs for maintaining and running the car, including fuel of course! Make sure you keep receipts.

[auntym]

as i pay my cartax on line i keep the email from them confirming payment and the taxdisc lol
the mot cert
and if parts required i keep the recepts for them

[Katiekoo]

This has been really bothering me as I don't understand it at all! :blush:
I bought a car for business use, it cost - £7,000.
My father in law has come up with a spreadsheet to work out 'depreciation' I can claim, I just don't understand it and don't feel comfortable claiming something that I don't understand. I've asked him to explain but he's not a good communicator - mostly grunts and repeats himself if you say you don't understand! :rolleyes:
I am quite capable and complete my own tax return, books etc. But I can't seem to get my head round any of this % stuff with cars and bills etc.
If anyone knows a book, website, source of easily understandable info that I could access it would really help me get my head round it all!
I really don't want to do it all wrong on my Father in law's say so!

[Chatterbox Childcare]

The amount you claim depends on the bpm of the car - if the car was purchased prior to April 2010 you can still claim the 20%. If you purchased the car after April 2010 you can claim10% if the bpm is higher than 167 and 20% if it is lower.

Also if you purchased the car part way through the year you have to allocate the WDV based on the number of months you have the car

If you wish to do this way of claiming you have to do full accounts for the CAR only. i.e. all receipts and invoices for what you are claiming, including a mileage sheet showing journeys to jusify your 95%.

When you come to sell the car, if you do so for more than the written down value then you will be taxed on anything above it

i.e. if you write off £1000 in the first year and £500 in the next you car would be worth £5500 if you started with £7000 but if you came to sell it and it was worth £6000 then you would be taxed on the £500 difference.

[Katiekoo]

Thank you so much that is most helpful, I feel more confident in speaking with my FIL now and will not use his spreadsheet until I am satisfied that it takes these things into account.
Thank you :)

[MrAnchovy]

The amount you claim depends on the bpm of the car - if the car was purchased prior to April 2010 you can still claim the 20%. If you purchased the car after April 2010 you can claim10% if the bpm is higher than 167 and 20% if it is lower.

The new rates came in for cars purchased after 6 April 2009, not 2010. I am not sure what bpm is, but the rates depend on the CO2 emissions of the car as follows:

<= 110 g/km CO2 100% First Year Allowance
>110, <= 160 g/km CO2 20% WDA
>160 g/km CO2 10% WDA

Also if you purchased the car part way through the year you have to allocate the WDV based on the number of months you have the car

I suppose that would make sense, but taxation is not about what makes sense it is about what is written down in law. You can always claim a whole year's Writing Down Allowance even if you purchase the asset on the last day of the year (assuming the asset is eligible for WDA of course).

[Hats]

The amount you claim depends on the bpm of the car - if the car was purchased prior to April 2010 you can still claim the 20%. If you purchased the car after April 2010 you can claim10% if the bpm is higher than 167 and 20% if it is lower.

Also if you purchased the car part way through the year you have to allocate the WDV based on the number of months you have the car

If you wish to do this way of claiming you have to do full accounts for the CAR only. i.e. all receipts and invoices for what you are claiming, including a mileage sheet showing journeys to jusify your 95%.

When you come to sell the car, if you do so for more than the written down value then you will be taxed on anything above it

i.e. if you write off £1000 in the first year and £500 in the next you car would be worth £5500 if you started with £7000 but if you came to sell it and it was worth £6000 then you would be taxed on the £500 difference.

I bought the car in July just to make it a bit harder to work out!!:panic: Thank you for all advice, think I'm going to sit down one eve this week and work it all out. Thankfully I do a weekly spreadsheet of business miles I do so will hopefully make a little easier!!

H

[Chatterbox Childcare]

The new rates came in for cars purchased after 6 April 2009, not 2010. I am not sure what bpm is, but the rates depend on the CO2 emissions of the car as follows:

<= 110 g/km CO2 100% First Year Allowance
>110, <= 160 g/km CO2 20% WDA
>160 g/km CO2 10% WDA

I suppose that would make sense, but taxation is not about what makes sense it is about what is written down in law. You can always claim a whole year's Writing Down Allowance even if you purchase the asset on the last day of the year (assuming the asset is eligible for WDA of course).

This is interesting as I just had a telephone conversation with the HMRC as I changed my car in Oct and they advised that I took the business % and then worked it pro rata to the time I had the car. Off to ring them again now thank you.

[MrAnchovy]

I changed my car in Oct and they advised that I took the business % and then worked it pro rata to the time I had the car.

Good old HMRC "help"line :rolleyes:

Don't forget that the balancing allowance or charge on your old car should be pro-rated for private use - if there is a balancing charge this works in your favour of course.

I'm also going to modify what I said in case this is taken out of context:

In a 12 month accounting period, you can always claim (the business use portion of) a whole year's Writing Down Allowance even if you purchase the asset on the last day of the year (assuming the asset is eligible for WDA of course). In an accounting period that is longer or shorter than 12 months (eg your first accounting period), the WDA %age is pro-rated according to the length of the accounting period not the amount of time you owned the asset.

[munch149]

wow i am newly registered childminder and bought a 7 seater specifically. am totally confused by all this. so basically i can claim 10% per year at a percentage of which i use it? e.g 95%. dont understand the rest. does this include finance too as my car was 9000 but as on finance overall cost is alot more than that. also paid extra for a warranty. bought car in january so how does that affect it?

[MrAnchovy]

This is where it gets complicated.

You can claim separately for the three elements of what you pay. Note that all payments are limited to 95% (or whatever the relevant percentage is for your business use in that year).

First the £9,000 for the purchase of the car. I'm not sure I can say any more than I already have on this thread, so have a read through again and if it makes sense on a second reading.

Second the interest. There are a number of ways of working this out; I'll give the simplest. Take the total for interest and any finance charge over the life of the agreement - this is often quoted as x% flat plus an arrangement fee of £y. Divide that by the total number of payments, and you have the finance cost per payment. Claim 95% of that each time you make a payment.

Finally the warranty. You can claim this over the life of the warranty - divide it by the number of months cover the warranty gives and claim 95% of this each time you make a payment too.

[jan]

I thought you could claim WDA and also mileage allowance@40p per mile. The only thing that would stop you doing it this way is if you wanted to claim for actual expenditure. Is this not the case?

[MrAnchovy]

No that's not the case. The WDA is part of the actual expenditure claim, it claims for (part of) the actual capital expenditure on the car. 40p per mile includes an (ever decreasing) element for the same thing, so you can't have both. The only thing you can claim in addition to 40p is (part of) the interest on a loan to buy the car. It is probably worth including HMRC's summary of the position as it covers all the ground:

You may calculate your motor expenses using a fixed rate for each business mile, provided that:


the rate used does not exceed the appropriate Approved Mileage Allowance Payments (AMAPs) mileage rate for the vehicle at the time it is used. We publish these rates annually

the annual turnover of the business at the time the vehicle is acquired does not exceed the VAT registration threshold (currently £68,000), and

no other motoring expenses (other than interest on a loan used to purchase the vehicle) are claimed and no capital allowances are claimed on the vehicle (since AMAPs rates already contain an element to allow for depreciation), and

such a basis is applied consistently from year to year so that any change to or from an ‘actual’ basis (including one required by a change in turnover relative to the VAT registration threshold) takes place only when one vehicle is replaced by another.

The VAT registration threshold is used here purely as a convenient limit whose real value is regularly reviewed; this practice has no application to VAT accounting and does not affect existing VAT rules and practices. This practice applies to cars, vans, motorcycles and bicycles. The AMAPs mileage rates vary between vehicles.

[jan]

Thanks for your help

[munch149]

thats much clearer now thanks. only thing that still unsure about was petrol/milage. some contradicting views on this. so if claiming for my car, i cant claim milage/petrol or can i?

[Chatterbox Childcare]

thats much clearer now thanks. only thing that still unsure about was petrol/milage. some contradicting views on this. so if claiming for my car, i cant claim milage/petrol or can i?

If you claim for your car you use the same business percentage as the WDV and allocate it to all the car expenses of service, mot, repairs, valeting, car wash etc but you MUST keep full accounting records for your car

.40p per mile you just keep a mileage record

[aly]

thats much clearer now thanks. only thing that still unsure about was petrol/milage. some contradicting views on this. so if claiming for my car, i cant claim milage/petrol or can i?

no it's one way or theother and you cannot change your mindpartway..you have to stick wiht it until the end of your car {if coaiming for car}

[MrAnchovy]

thats much clearer now thanks. only thing that still unsure about was petrol/milage. some contradicting views on this. so if claiming for my car, i cant claim milage/petrol or can i?

Yes you can claim petrol, at the same percentage as you are using for all the other costs. No you can't claim mileage.

[munch149]

So I keep petrol receipts for the year and claim percentage rather than working out milage? Lol sorry if im repeating myself

[MrAnchovy]

Yep, that's it, although you still need to keep the mileage records to work out the percentage of course!

[Chatterbox Childcare]

So I keep petrol receipts for the year and claim percentage rather than working out milage? Lol sorry if im repeating myself

You have to keep all receipts relating to your car if you are not claiming mileage and if you are claiming mileage you don't have to keep any receipts