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Many thanks for your prompt and clear response.
As a driving instructor I'm looking to renew my dual control car during the current tax year.
If I understand correctly if I lease the vehicle then the amount paid each month, together with fuel and an servicing costs etc, is an allowable expense to be declared on my tax return. So far so good.
My question however is what happens in the event of an outright purchase.
Being a dual control vehicle I understand that I can apply the total amount paid for the car under AIA with fuel and associated costs as allowable expenses.
Putting figures to the issue is where my lack of understanding occurs:
• Income after expenses is, for example, £30k
• Personal Allowance (21-22) is £12,570 leaving a tax due on £17,430
If I purchase outright with a single payment a dual control vehicle costing £25k (using a combination of earnings and savings) do I:
1) apply the whole amount as AIA, ending up with a balance (loss) of £-7,570?
2) apply £17,430 as AIA, ending up with a balance of £Nil and in subsequent years use WDA on the carry-over (£7,570 in the first year, reducing each subsequent year)?
3) if 1) does £-7,570 (loss) carry across into the subsequent year in full thereby reducing income?
4) if 2) is the £7,570 subject to 18% WDA or a different amount calculated on CO2 emissions even though the vehicle, being dual control, is treated as Plant & Machinery rather than a private car?
Look forward to hearing from you.