Capital Allowances on Cars

Can you claim Capital Allowances on a car in a Property Investment Limited Company?

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A client has asked if he can buy a brand new electric car with 0 Co2 emmisions through his Property Investment Limited Company. The price of the car in question is £120,000 so the potential FYA of 100% is substantial. My question is does any one know of any restrictions of doing this because it is a property investment company rather than a trading company. Any help would be much appreciated. Thank you.

 

 

 

 

 

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By richard thomas
03rd Dec 2021 16:04

There's nothing to stop him buying it "through" a company, but your question does suggest that doing that would enable the company to claim capital allowances. But you, or he, seem to have overlooked s 11(4)(a) CAA 2001 which requires the asset to have been acquired by the company for the purpose of the qualifying activity, namely the property business, before allowances can be given.

Even if there is some use by the property business, have a read of G.H. Chambers (Northiam Farms) Ltd v Watmough (HM Inspector of Taxes) 36 TC 711.

Of course the same points apply if he buys it "through" a trading company, rather than a property business company. It has to be the trading company's purchase for its own use.

The BiK will be the same either way, as far as I can tell.

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Replying to richard thomas:
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By More unearned luck
03rd Dec 2021 18:55

The company's accountants believed that corporations have a private life. The company's accounts added back 1/12th of the WDA for private use! Was this a common practice in the 1950s? The additional add back by the general commissioners defies the reality that the car was part of Mr Chambers' remuneration package` and the cost of its provision fully allowable unless the cost of package exceeded a commercial remuneration package. It seems tha the company didn't run the remuneration package argument. The moral is don't claim relief on a Bentley that is grander than the Judge's Bentley.

If, as part of the government's policy of encouraging the take up of electric cars, the BIK rates for such cars were set at nil or v low percentages, it would be egregious of HMRC to invoke Chambers as an alternative way to tax the car.

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Replying to More unearned luck:
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By Tax Dragon
03rd Dec 2021 23:32

Is it taxing something to deny a relief that is only available to some, and that by happenstance?

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Replying to richard thomas:
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By stuart cox
06th Dec 2021 09:40

Thank you Richard much appreciated.

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