Finance Lease

Finance Lease

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Could someone please explain the capital allowances that may be claimed on a commercial vehicle taken on a finance lease. Is it possible to claim 100% tax relief on the vehicle as in a vehicle bought on Hire Purchase. I have read various conflicting manuals - in fact - one says you can only claim the depreciation against tax?

The car dealer advised a 100% tax relief could be claimed in the first year and also the VAT on the monthly payments?  So far the only paperwork I have seen has been monthly invoices from the dealer saying To Rental of vehicle - this looks more like contract hire to me but I am waiting for further paperwork to come through to ascertain the type of agreement.

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By User deleted
04th Mar 2012 15:05

A lease is a lease is a lease

So no capital allowances. But are you confusing the agreement with a lease purchase? (But then the VAT treatment would be different - either way, the dealer's advice looks suspect, to say the least)

If it's a finance lease, you claim the depreciation (so longas it's calculated in accordance with generally accepted accounting practice) and the notional 'interest' charge that hits the P&L. VAT is, as you say, reclaimable on each payment under the lease. I've no idea what the dealer was talking about when he mentioned 100% allowances in year 1.

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