Dear sirs / madam,
I am both employed and self-employed on property rental business, currently limited to renting a room in my house. I would like to expand my business and seek for business opportunities, such as to perform house viewing, continue development by attending conference. Therefore a car is now necessary for me.
I have looked at EV that can give me 100% capital allowance to set off any profits from my self-employment business. Assuming the price of EV is £45,000, and my self-employment income is £12,000, that will made my business traded in a loss of £12,000 - £45,000 = loss of £33,000. Assuming my FY24/25 employment income is £60,000 in FY24/25, as self-employment losses can set off against other income such as the employment income, my taxable profit will therefore be £60,000 - £33,000 = £27,000 in simplest scenario. And that's the basis that I will be taxed, bring me from 40% tax bracket to 20% tax bracket, paying income tax of (£27,000 - £12,750) * 20% = £2,850? If I use the EV for personal mileage, will my BiK tax be charged at 20% tax bracket too?
By claiming the 100% capital allowance, can I still claim depreciation charge on my EV for the following 5 years of useful life if I am using the traditional accounting method?
Is there a differences in how much capital allowance I can obtain if I pay the EV at once or through hire purchase? And must I take out a business hire purchase instead of a personal hire purchase to show that I will use the EV in my self-employment business.
Is there any other tax that I should be considering?
Thanks,
