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Capital allowance claim on car

I have a client who set up as self-employed in May 2009, bringing into the business an audi valued at about £10,500 at commencement of trading. She traded this audi in in the August of 2009, buying a mini clubman diesel, which just qualifies for full 100% FYA (109 g/km). The mini cost £15,100 and trade in value for the audi was £8,200.  Both cars are used 90% business/10% personal.

My question is this - does each car have to be pooled separately as they both are private use assets, or can they be pooled together (both using the same % personal use), with the audi treated as a disposal offset against the mini.  My understanding is that they should be pooled separately, but this would seem to give an excessive amount of CAs with the mini attracting 100% FYA and possibly a balancing allowance on the audi as well?

Any advice welcomed.

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07th Dec 2010 13:46

separately

As far as I know, assets with private use must be pooled separately.

The allowances therefore seem legitimate on the face of it, but you have to wonder how the Audi could go from being worth £10,500 in May 2009 to being worth £8,200 in August 2009.  For me, that calls into question the original valuation - only you can judge how robust it is.

The 100% FYA on low Co2 cars is a tax incentive from the government to influcence spending.  The impact is that your allowances would be very high - seems logical to me....

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07th Dec 2010 15:33

Thanks thisistibi - you confirm what I thought.  Regarding the valuation of the audi, I did question her about this and she says that her boyfriend had a slight accident in it which would have reduced the value - add to that the fact she traded in and you never get full value on a trade-in so I feel OK about using the value quoted.  I shall just run with it - at least I should have a happy client as her tax bill is going to be reduced by about £3,400 thanks to all the CAs across all pools!

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