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Treatment of car HP in self-assessment

How best to account for a business vehicle purchase via deposit and HP on self-assessment

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How would you process this senario on a self-assessment?

  • High emission vehicle purchased at start of tax year
  • Deposit of 30% paid upfront
  • Balance is HP over 60 months
  • Other vehicle expenses of Fuel, Insurance, maintenance
  • Evidence supplied to support 90% business useage of vehicle
  • Cash basis used for all other aspects of business

If anyone can help on how to put all this in correctly I'd be very grateful

Replies (6)

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Vicki Boddice
By Vicki Boddice
02nd May 2022 15:12

Thank you, apologies, I should have said that the client previously used cash basis, I am converting them over in this return too, I am not using the cash basis for them. Those examples are helpful

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By DKB-Sheffield
02nd May 2022 15:55

Unless I'm missing something, and assuming your later post confirming cash basis is not used (*at all* - as opposed to 'for all other aspects of business' per your OP), isn't the car just a straight forward Single Asset Pool, WDA 6%, WDA restriction at 90%?

The HP balance (assuming this is HP and not a lease - it certainly seems to be HP by reference to the deposit) and deposit payment should not affect the tax at all (again, assuming blanket non-cash basis). It will affect the balance sheet (assuming one is prepared), and potentially the trading accounts.

As you have suggested, the purchase was at the beginning of the tax year so, cash basis adjustment shouldn't be required (for the asset).

The fuel, insurance,maintenance etc. seems straight forward. 10% being disallowed. Remember the HP interest!!!

The one other issue I'd be considering is whether the evidenced 90% business usage is correct. There are many times I've had such high (evidenced) figures which, on scratching the surface, I find major discrepancies. In my experience, it's mainly driving schools and taxi drivers tend get those figures and your post seems to point towards this client being neither. However, you can only advise, and assuming the client is willing to confirm the 90% (in writing with caveats), it's on the client's head!

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Replying to DKB-Sheffield:
Vicki Boddice
By Vicki Boddice
02nd May 2022 16:11

Thank you, that confirms what I initially had, for some reason I just couldn't convince myself it was right!
Agree about the usage, I always get things like that confirmed in writing just in case and stored with the evidence.

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By rmillaree
03rd May 2022 07:58

I would start by asking what the business mileage is and deciding whether mileage is likely a better method to use than actual expenses.

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By David Gordon FCCA
04th May 2022 11:51

As already said, it would be exceptional to have an "Automobile" accepted as a business (Commercial) vehicle except and unless it is a taxi, hire-car, ambulance, or similar.
So, you are back to the usual rules re mileage allowances etc.

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