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Car Wrap, capital cost or expense?

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If a director decides not to buy a new company car after three years of owning the current vehicle but instead to give the current car a facelift with a car wrap (cost about £2k) then is this a capital purchase as an improvement (no reclaim of VAT, adds to BIK value of car) or can it be treated as a repair (VAT reclaim, no BIK effect)?

 

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Hallerud at Easter
By DJKL
04th Nov 2019 17:12

If he decided to have the car resprayed what would you decide? For me it is a repair but that is mere gut feeling rather than any real in depth knowledge re the taxation of company cars.

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By The Dullard
04th Nov 2019 17:22

1) Whether it is capital or revenue, why can't you reclaim the VAT? The supply is not the supply of a motor car.
2) For BIK purposes, the question of whether the expenditure is capital also does not arise. The question that arises is is whether the wrap is an accessory, and it seems to satisfy that definition (in ITEPA 2003 s 125), but not qualify for replacement accessory treatment under s 131, because there is no old accessory.

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