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Sole Trader Car Query

Sole Trader Car Query

Hi all,

Got myself in a muddle over this one and hoping someone would lend a hand.

Client (sole trader) bought a car and claims expenses for business usage (80%).  Car is low CO2, so 100% capital allowance involved.

New financial year, and thinking of not using it for business purposes anymore, ie all private usage.

In HMRC's eyes, the client owns the car, so would you just not make any further claims for it?  Or is there a deemed disposal to heself and a capital profit (80%) exist.

Also what if the client purchases a new car but still has the old car?

Any assistance would be much appreciated.

Thanks in advance


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By Pushkin
23rd May 2012 07:01

I'd say there will be a

I'd say there will be a deemed disposal to the client as the asset has ceased to be used for business purposes.  The disposal would be at current market value and a balancing charge will arise.

 thinking of not using it for business purposes anymore, ie all private usage.  Why is this?   Is another family member going to use the car?                Will the client not use it at least sometimes for business purposes?  If the private % merely changes then  it would remain a business asset and a % of the running costs can still be claimed and the balancing charge will be avoided for the time being.  I'd check with the client who will be the registered keeper and the insurance details - main driver, other named drivers and if insured for business purposes.  



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to Poppy664
23rd May 2012 07:08

Many thanks for the reply. Yes it will be used by another family member, so no longer in use for business.

Once again thanks for the information a great help

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