Capital Allowances – all change! By Rebecca Benneyworth

What would happen if a disabled business owner bougt a car. The client is mind is exempt from VAT when he buys the car initially and the vehicle is registered from day one as a disabled motor vehicle via the DVLA.

Would he through his smal business be able to claim the car in one lump sum via AIA or would we need to use the new reduced capital allowance rates.

The reason I ask is that no matter what I read on the new rules I can not see the answer to the above question.

If a van is used privately by an employee (incurring the BIK), would hiring the van instead of purchasing be preferable? Or would this then incur an expense hire charge restriction?

Has anybody thought about the financial consequences of the phasing out of ABA and IBA which will affect many farming and other qualifying businesses. The allowance which is currently at the rate of 4% pa is effectively being reduced to 3%, 2% then 1% over the next 3 years. Any unrelieved expenditure thereafter (which could be considerable for some businesses) will not qualify for any tax relief. Or will the farming community force the Chancellor into another re-think on a badly thought out change.

There are quite a few examples in the consultation document which was issued last July. Although we have moved on a bit in some respects, most of the computational stuff is unchanged.

Have a look at this document (download it) starting at page 25.
http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageLibrary_ShowContent&propertyType=document&columns=1&id=HMCE_PROD1_027779

I would be ever so grateful if anyone could point me in the direction of some worked examples to show the affect of these changes.