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Posted Sat, 20 Nov 2021 08:00:55 GMT by Gill Smith
Hi, I am a sole trader with average annual gross income of about £22K. I'm looking to purchase a new electric car for my business and personal use...80% business. This will cost around £25K. If I buy it outright, I understand I can claim against 100% of the car in the first year, but, bearing in mind my taxed income is only a fraction of this, can I carry forward the loss to following years? If I buy the car instead on HP, can I then claim for payments over the next 2/3 years until the car is paid for? I have checked Capital Gains/Car Expenses advice on your websites but I am still very confused, especially about 100% in the first year statements. Thanks
Posted Mon, 22 Nov 2021 15:38:50 GMT by HMRC Admin 17

If you claim the full amount in the first year, and this generates a loss then you can carry this loss forward.

Please see further guidance here on losses :

Relief for trading losses (Self Assessment helpsheet HS227)  .

If this is bought on hire purchase then you can claim the monthly costs if you are not claiming capital allowances.

Further guidance on capital allowances can be found here :

Capital allowances and balancing charges (Self Assessment helpsheet HS252)  .

Thank you.
Posted Thu, 25 Nov 2021 08:49:06 GMT by Gill Smith
Thank you for that! Is there a limit to how many years I can carry loss over, if I buy the car outright?
Posted Mon, 29 Nov 2021 08:37:44 GMT by HMRC Admin 19

You must begin to utilise the loss when you start to make a profit.

You can find guidance on losses here:

Relief for trading losses (Self Assessment helpsheet HS227)

Thank you.

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