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Capital Allowances on PCP car purchase

Is this a lease or a purchase?

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I have been asked for advice about the availability of capital allowances on a new electric car. (I have the impression that the salesman is trying to push the capital allowances angle to clinch the deal.) The vehicle will qualify for 100%  first year allowance if this is a purchase but I am wary. The purchase by a limited company is being financed through a Private Car Purchase agreement with a substantial deposit (39.5% of cost) followed by 36 monthly payments and then a final large sum (36% of the original cost). In addition there is a clause in the agreement whereby the company may appoint the dealer to sell the vehicle rather than pay that final sum. Any advice will be much appreciated.

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By Paul Crowley
19th Aug 2020 21:57

In the good old days the terms used were hire purchase and contract hire.
Contract determines the rules for tax.
is the balloon end payment clients choice to sell?

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Replying to Paul Crowley:
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By GamekeeperTurnedPoacher
20th Aug 2020 11:02

Thank you! Much appreciated!
The agreement states
9 OWNERSHIP OF THE GOODS
You will become the owner of the goods if you comply with the terms of this
agreement when you have made all the payments shown on the front page
(except the Final Payment postponed under clause 2.04 if you appoint us to
act as your agent to sell the goods). Until then the goods will belong to us
even though you have possession.

I can provide by email a copy of the full agreement suitably redacted for confidentiality if you wish.

Also client has provided info from manufacturer/dealer on the contract and finishing with " I feel that this would satisfy the criteria for treating the agreement as a Hire Purchase and therefor being eligible for Capital Allowances, as per Mercedes case that went before the European Court if Justice in 2017."

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Replying to GamekeeperTurnedPoacher:
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By Paul Crowley
20th Aug 2020 11:50

There is enough there to make it clear that it is a purchase.

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By GamekeeperTurnedPoacher
20th Aug 2020 12:17

Thank you very much Paul. Really appreciate your help.

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By albereto
19th Aug 2020 22:05

It's a purchase - ask the dealer (depending on finance co) to put it on a Contract Purchase which is the same arrangement for businesses.

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Replying to albereto:
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By GamekeeperTurnedPoacher
20th Aug 2020 12:52

Thank you

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