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Initial Road Tax on the purchase of a new vehicle

Initial Road Tax on the purchase of a new vehicle

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I have an invoice for a new vehicle, which includes plylining and delivery etc, should I include the initial road tax as part of the cost of the asset or should I treat it as revenue expenditure?

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By Gem7321
30th Sep 2015 12:59

Revenue

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By Haydar
30th Sep 2015 13:52

Cost

I might disagree with Gem7321 here.

If the road tax had to be purchased for it to be delivered to the customer, then I would have thought it would form part of the cost of the car.

If however, the new car was delivered to the client, and the client and went and bought the road tax himself separately then it is an expense.

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By FJW
30th Sep 2015 15:18

Thanks, the tax charge was added to the purchase price by the dealer before delivery so I was thinking that it's part of the cost required to bring the asset to the condition of its intended use/location, do you agree?

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By Haydar
30th Sep 2015 15:45

Agree

If its on the invoice, then totally agree it should be capitalised.

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By SKCOX
30th Sep 2015 20:31

Another vote for revenue

What's the period covered by the road tax payment? 12 months? And what's the useful economic life of the car?

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Replying to Insolvency Practitioner:
RLI
By lionofludesch
30th Sep 2015 20:56

Depreciation

SKCOX wrote:

What's the period covered by the road tax payment? 12 months? And what's the useful economic life of the car?

Presumably the VED element will be depreciated separately at a rate of 100% per annum.

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RLI
By lionofludesch
30th Sep 2015 20:49

Revenue

Capital ?   Never heard such nonsense.

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