Self Employed Self Assessment: Capital Allowance and Car Lease/HP

Self Employed Self Assessment: Capital...

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Could you assist by checking I have this correct:

Two people own three properties and earn rental income from them, they file a yearly SA as a partnership then divide the net amount and use that on their own SA.

One of them wants to lease a car for business use with 116 CO2 for two years at £300 with a £1200 deposit.

One of them already has a PCP (similar to hire purchase) for £250 a month and paid a £1000 deposit. Business use is 90% and 10% personal. CO2 is 159.

In terms of mileage, it varies between 6-14k a year, so in some years the mileage route may not be of use. I understand that you need to stick with 1 method.

My query is that the entries would go as follows;

For person 1: The lease;  the deposit and monthly amount would be recorded as an expense, along with the road tax, insurance, petrol receipts, servicing, tyres, and so on.

For the 2nd person, his SA will offset the monthly interest as an expense as well as the deposit, but 10% comes off due to personal use. Then the total car value is used as capital allowance after taking off 15% due to CO2 and 10% off due to personal use. Like the above, expenses are recorded but at 90%.

Is this correct? Is there a penalty or some issue with capital allowance?

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By duncanedwards
29th Aug 2014 00:10

That's interesting

I wasn't aware property letting could be carried out in partnership, but apparently it can:

http://www.hmrc.gov.uk/manuals/pimmanual/pim1030.htm

 

A bit more on topic, when you say business use is 90%, is that just an example?  It seems high for a 3 property rental business, when combined with total mileage of up to 14,000 pa.

 

I posted this in response to a similar query recently:

https://www.deloitte.com/assets/Dcom-UnitedKingdom/Local%20Assets/Docume...

 

 

 

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By activelyreactive
29th Aug 2014 22:51

Forgot to add the eBay selling he plans on doing will account for time as well, the property distances total 25 miles apart from each other and checks on them often.

Any one have an answer to this?

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