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Capital introduction

Capital introduction

My client set up a cleaning business and to assist her, her self-employed husband is willing to buy her a car for the business.  He would like to offset this purchase against his taxable income, is there a means to achieve this?  Or is it only capital introduced for her and drawings for him?

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21st Apr 2015 08:40

You asked the same question last week.

But the simple answer to your question is that gifts to spouses are not deductible in computing trading profits in the UK. If the wife buys a car with the husband's gift she will be able to claim capital allowances on it but he won't.

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By BKD
21st Apr 2015 09:37

Slight amendment

The wife does not need to buy the car - CAA 2001 s14.

But, as John says, the allowances will belong to the wife - no offset against hubbie's income.

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21st Apr 2015 10:41

And

only the appropriate fraction of the capital allowances that reflect business use can be claimed by the wife.

 

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By Bungo
21st Apr 2015 10:49

Company car
I bought a new car in January, a private purchase before I even thought of setting up my business. My family (of non accountants) have all suggested I transfer (sell) the new car to the new business because everybody assumes it makes sense for tax reasons. Having briefly looked into it, I don't think it is necessarily the case and keeping the car as a private vehicle and charging business mileage may well make more sense. (I think).

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21st Apr 2015 11:01

It may well do, Bungo.

Most of my clients do that but not all. You have to do the arithmetic based on your particular circumstances.

 

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By Bungo
21st Apr 2015 11:09

Will do

Phil Rees wrote:

Most of my clients do that but not all. You have to do the arithmetic based on your particular circumstances.

 

Yep will do, just not got round to it yet, but preliminary thoughts are that it will. I wanted to highlight to OP that it is an option and could be the best one.

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21st Apr 2015 21:11

Thanks for the replies and confirming my initial thoughts.

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