Hello
One of our clients has two high value company cars, in which he has made capital contributions of more than £5000 for each.
Section 132 of ITEPA allows a deduction against the list price for capital contributions, but the legislation is couched in terms of "the car". It is unclear whether the £5000 limit applies per vehicle or in aggregate
Does anyone have view?
Thanks in advance
Replies (1)
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Per vihicle
As a capital contribution he will get effective relief on £5,000 at the CO2 percentage rate. If the same sum was paid as a contribution to private use, rather than as a capital contribution it would reduce the benefit in kind on a pound for pound basis. If the CO2 percentage was 25% you'd need to keep the car for more than 4 years for a capital contribution to exceed the amount contributed. If the list price was £40,000, the BIK would be £10,000 and the capital contribution would be relieved immediately - bird in hand etc. In any event any contribution in excess of £5,000 should be treated as a payment for private use.