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Posted Tue, 29 Mar 2022 19:58:23 GMT by tony nicolaou
Hello, I am self employed driving instructor as a sole trader and I have purchased a car to use for teaching. Am I allowed to use simplified expenses as apposed to using capital allowances please? Thanks in advance
Posted Thu, 31 Mar 2022 13:52:25 GMT by HMRC Admin 20
Hi tony nicolaou,

Yes you can choose to use Simplified Expenses please see guidance on the subject here:

https://www.gov.uk/simpler-income-tax-simplified-expenses.

Thank you.
Posted Mon, 04 Apr 2022 18:03:15 GMT by tony nicolaou
Thank you very much for that. I have another question please. I have an electric car for my business as a sole trader (driving instructor). I am on a smart tariff for my electricity and I am considering purchasing solar panels and a home battery storage system. The plan is that I can charge the batteries with the solar panels and when there isn't enough solar I can then charge the batteries on an "off peak" rate £0.75p (7.5p) per kWh which is 4x cheaper than the "peak" rate £0.3023 (30.23p). I already charge my car in the "off peak" rate but the car's battery isn't big enough to last the whole day so I often charge the car in the day time during the "peak" rate. The plan then is to charge my car (for business use) from the battery & solar system during the day peak rate of my fixed smart tariff. By doing this I would save on average £76 per month on my business use. Would (one or both) of the purchase of the solar and the battery system be a valid business expense minus the personal use portion please? Thank you
Posted Thu, 07 Apr 2022 11:02:56 GMT by HMRC Admin 10
 Hi

The expenditure described would be capital expenditure.

If you use traditional accounting, then to qualify for capital allowances there are conditions that must be satisfied.

See CA23010 ,Capital Allowances Manual - HMRC internal manual, GOV.UK (www.gov.uk).

There is also a requirement that there must be identifiable business use, so where there is a partial use of equipment for purposes other than those of your trade, then an apportionment to an amount that is just and reasonable having regard to the relevant circumstances should be made CA27000 - Capital Allowances Manual - HMRC internal manual - GOV.UK (www.gov.uk).

Qualifying expenditure incurred on solar panels qualifies for capital allowances at the special rate and attract writing down allowances at the lower rate of 6% although Annual Investment Allowance may be available, CA22335 - Capital Allowances Manual - HMRC internal manual - GOV.UK (www.gov.uk).

And for general capital allowance guidance:

Capital allowances and balancing charges (Self Assessment helpsheet HS252)

If you use cash basis accounting, there is more on capital expenditure at :

Allowable business expenses: cash basis and traditional accounting

Any payments made for both a business and a private purpose should be apportioned, and only the business proportion should be included as an allowable expense. 

Thankyou.

Regards.

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