Balancing allowances on cars

Balancing allowances on cars

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I deal with a few taxi drivers. Each driver has one car which costs £25 -30k which he will drive into the ground for 3-4 years before replacing with a similar vehicle. All cars have CO2 emissions well above 160g/km.

With the "new" capital allowance regime it appears that cars are pooled and so no balancing allowance is available when sold. However if we say that there is some private use on the car, say 1%, and I disallow this porportion of the cost associated with the car and the capital allowances, then would I be correct in thinking that the car goes into a special rate private use category and is held seperate from the pool so that a balancing allowance can be claimed. (I truly think 1% would be about accurate as they all have other cars and the business mileage that they do is exceedingly high compared to any odd personal trips.)

All the drivers are sole traders and genuinely nice guys - no dodgy dealings - mostly chauffeuring company directors to and from meetings (hence the nice cars.) All of them will really struggle when they change cars if they cannot get a balancing allowance.

Do you think this would work? Thanks in advance for any help.

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By thomas34
08th Oct 2010 12:36

Balancing Allowances

You are correct and it will work.

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By PennyC
09th Oct 2010 11:53

It will work - in theory

But I would fully expect an HMRC challenge to only 1% private use, unless the client has immaculate records that can support the claim without doubt (not sure how many taxi drivers meet that description). It's such an obvious dodge that I'd be very surprised if HMRC accepted it without question.

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