Sole trader car purchase tax

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josadler7 | 09:46 Mon 24th Oct 2011 | Business
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Please can some help? I am working as a sole trader and my car (mostly used for business, it’s essential) is starting to fail, just had a £500 repair bill… So I am going to have to replace it, the HMRC website states that a ‘full allowance’ is due in tax terms for a new vehicle purchase. I’m not sure how to interpret this – does it mean that a % of the new purchase price can be accounted as a deduction in profits against tax? If so how much – I had planned to buy a second hand car but if there is a tax benefit a new car may be a better option since I am having a reasonably good year in terms of profit and could afford a Ford Focus sized new car. Thank you in advance.


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You can claim capital allowances on the purchase of a car against business profits (though you cannot directly write the car to expenses). The amount you can claim annually depends on the emissions of the car. You are also required to make a private use adjustment if the car does any private miles. It doesn't make any difference whether the car is new or used.
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Thank you Skyline D, so am I right in that if I purchase a car producing less than 110 g/km CO2 I can claim capital allowance for the purchase price minus a percentage attributed to personal use? any idea how do they verify this?
"I can claim capital allowance for the purchase price minus a percentage attributed to personal use" - that's certainly my understanding.
"Any idea how do they verify this" - you declare it to be true on your self-assessment and they might decide to subject you to a check, then again they might not. The obligation is on the taxpayer to be truthful (or suffer consequences if HMRC finds otherwise).

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