Capital Allowances for cars/hackney carriages

Capital Allowances for cars/hackney carriages

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Dear all. I hope you can help me with my query. My partner is a taxi driver and I keep accounts for him and some of his friends. Everything was quite easy so far, but now the problem lies as follows:  my partner is a hackney and bought a car which he uses 100% for business (as we have another car for private use) can we deduct the price of the car as AIA or we can only claim WDA depending on CO2 emissions? I looked on the HMRC website, it says that only black cabs can claim AIA, as treated as special car, although I know some accountants split their opinions on the fact that if the car has business sign on it and radio and is hackney then AIA can be claimed. In addition, if the car is bought on lease (hire purchase) then I am right to treat it as business asset (because of the substance over form principle) or does it have to have special terms in the contract? I am not good at contracts and not sure what conditions it has to satisfy to differentiate it between finance and operational lease.

Thank you for your help, any advice is appreciated.

Replies (4)

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By Tim Vane
05th Oct 2015 22:09

If you tell us the make/model of the car then we can answer the question definitely one way or the other, but it sounds like it will not qualify for AIA.

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By cheekychappy
05th Oct 2015 22:21

CAA 2001, s268 is the reference.

If it's a car then AIA is not available.

It is defined as a car if it is not a goods vehicle, a motor cycle, an invalid carriage or a vehicle not commonly used as a private motor vehicle and unsuitable for such use.

It would appear that AIA is not available in this case.

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By fahadfaiz
26th Jan 2018 11:07

A black cab is of course of a vehicle of a 'type not commonly used as a private vehicle', but is it 'unsuitable for such use'?

The answer may be found in HMRC's manual CA23510, which states that Hackney carriages should not be treated as cars for capital allowances purposes.

Consequently, Hackney carriages are eligible for AIA.

A similar exclusion applies to driving school cars fitted with dual controls and certain double-cab pick-up trucks.

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Replying to fahadfaiz:
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By Portia Nina Levin
26th Jan 2018 11:23

You're just too cute!

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