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Annual Investment Allowance available for Taxi

Client purchased a Metrocab costing £30,750. Is this eligible for Annual Investment Allowance? Assuming it is can the allowance be restricted in order to reduce taxable profit to the personal allowance level?

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By pawncob
16th Jul 2009 20:48

Yes, yes (but not thrice yes)
Yes to both.
See previous replies as to how clim is limited.

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By DMGbus
17th Jul 2009 08:55

Don't overlook working tax credits (WTC)
The advent of 100% AIAs brings in the possibility of very valuable tax credit claims with expenditure of this nature and value.

So, if the client is a sole trader who is not already registered for WTC then he/she should be advised to do so immediately. The problem here is if the client wasn't registered for WTC then the (would be) full entitlement of WTC cannot be obtained beyond the past 13 weeks prior.

A financial year end of 30th April can very useful in overcoming this problem of not realising that a given tax year has profits suddenly low enough to qualify for WTC, not a well publicised fact as know one (except myself) seems to be keen on 30th April year ends any more.

Example of WTC - aged 25+ and working 30+hours per week, no children.
Normal total family income = £40,000 : WTC = nil.
Buying a new cab with AIA of £30,000 effectively reduces family income to £10,000 and an entitlement of £3,130 WTC arises.

NB. If the business is a Ltd Co then the client will most likely be a several thousand pounds worse off from a WTC viewpoint than compared to the sole trader (or partnership) example figures given above !

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