Can you claim back the cost of a vehicle?

Howdy folks,

Just wondering about this.. as a sole trader who is not VAT registered, you can claim for fuel etc.

But can you get anything if you specifically changed car for the benefit of your business (ie; moved to a larger vehicle to transport items, swapped from petrol to diesel for high mileage, etc. etc.)?

I know if you're VAT registered you can claim back the VAT on the purchase if buying from a business/dealer, but what if you're not VAT registered?


I'm lead to believe that if you use a PC for business use, you can claim back a percentage of its cost (ie, if you use it for business 50% of the time, and recreational use 50% of the time, you can claim back 50% of the cost of it as it's a business expense?).

Would this apply to a vehicle? If so (or if not, either way) would this also apply to immediately relatable costs (tax, insurance). I believe you can claim back maintenance costs were the business use of the vehicle would have contributed/caused the maintenance to be required?

Vehicle is private (ie; not a commercial).


Anyone know? Googled about a bit but not finding much online (with the exception of claiming vat back).


Cheers.

Cherry Blossom

Vehicles are capital expenditure. The only relief on income tax is on a loss when a business vehicle is disposed of. If your private car is used 25% of the time for business purposes you can claim 25% (or whatever percentage) of maintenance, motor tax, insurance and fuel costs as a business expense. It makes no difference if the car is petrol or diesel if you are not vat registered.

You can never claim back the vat on passenger vehicles unless you are a car dealer.

Lockedout2

Cherry Blossom wrote: »

Vehicles are capital expenditure. The only relief on income tax is on a loss when a business vehicle is disposed of. If your private car is used 25% of the time for business purposes you can claim 25% (or whatever percentage) of maintenance, motor tax, insurance and fuel costs as a business expense. It makes no difference if the car is petrol or diesel if you are not vat registered.

You can never claim back the vat on passenger vehicles unless you are a car dealer.

A motor vehicle used for business qualify for capital allowances. These are based initially on the cost of the motor vehicle.

You are entitled to claim the % of the annual allowance based on business use.

Cherry Blossom

Apologies if I have given the wrong advice. I wasn't aware any other relief was available for cars other than on lease.

Cheers folks for the replies. I appreciate it.

In Joe Soap terms, I believe Capital allowances pretty much means you can claim back the cost of the car, but you just have to do it in dribs and drabs over the course of a few years (or the expected lifetime of the vehicle)?

Or am I way off the mark?

ants09

Deleted User wrote: »

Cheers folks for the replies. I appreciate it.

In Joe Soap terms, I believe Capital allowances pretty much means you can claim back the cost of the car, but you just have to do it in dribs and drabs over the course of a few years (or the expected lifetime of the vehicle)?

Or am I way off the mark?

Car provided before 1st July 2008:


The specified amount of €24,000 applies to passenger motor cars acquired for business use in chargeable periods ending on or after 1st January 2007.


For expenditure incurred on or after the 4 th December 2002, the rate of the
allowance is 12.5%.

The % is applied to the lower of cost OR the specified amount.

Calculation of capital allowances on or after 1 st July 2008:

The specified amount of €24,000 continues to apply.

The rate of calculation remains at 12.5%.

The car is now classified A – G depending on the carbon emissions level.

Category A B or C: 12.5% is applied to a cost figure of €24,000 when the car cost is less.





Categories D and E: 12.5% is applied to HALF of the lower of actual cost OR €24,000.


Categories F and G: No capital allowances are available.

It seems to me that you don't know capital allowances, so i suggest that you talk to your accountant or tax consultant, as getting taxes wrong can have a massive impact.

Well I have an appointment on Tuesday morning so should know more then, all going well.

Just to update here, as was said above, I can claim back 12.5% of the cost of the car (the purchase price was €8,500). So i can claw back €1,062.50 per year.

ants09

[Deleted User] wrote: »

Just to update here, as was said above, I can claim back 12.5% of the cost of the car (the purchase price was €8,500). So i can claw back €1,062.50 per year.

As I said above, speak to an accountant or tax consultant if you don't know what your doing.

What about private use ?
How will you estimate and prove private use ?
When you sell or trade in the car, do you know how to calculate balancing charge/allowance ?
Etc

DmanDmythDledge

You definitely can't claim the entire cost as there will be a private element to the usage of the vehicle.

If you are going to claim capital allowances on the cost of the motor vehicle there are various conditions that need to be met. It seems to me like that your accountant didn't go through these with you. Is he/she also AITI qualified or work with people who are? Often accountants give tax advice without fully understanding or researching the ins and outs.

ants09

ants09 wrote: »

As I said above, speak to an accountant or tax consultant if you don't know what your doing.

What about private use ?
How will you estimate and prove private use ?
When you sell or trade in the car, do you know how to calculate balancing charge/allowance ?
Etc

No idea about any of that. Accountant was the one who informed me. He's been around for years and relatively well established, so I'd trust him.


In regards to Private VS Commercial use, the car's mileage would be easily 95%+ for Commercial. It potters about the town in private use for a short while here and there. Commercially, it travels the width of the country on a regular basis.

I don't know enough about the situation, and in all honesty the accountant did say 12.5%, but he might actually not be putting that much down, to take into consideration private use. He asked me a fair few questions about my work, my general breakdown of car usage, helped me with what things I can and can't claim back, etc.

As I say, he's around a while, and was recommended to me by more than one person that I know he helped out. So I'm happy to kind of take a back seat and leave him to do his own thing.

I know the figures that are being claimed for different things, and I am staying very much on the conservative side. I've used figures and claimed for things that, if a Revenue inspector showed up on my doorstep tomorrow, I would feel comfortable defending my claims.


That said, I'm a fairly small time, self employed joe soap, making little more than the average sales assistants around the country. I'd imagine they have about as much interest in the likes of me as I have in the Euros (ie; none at all).


I do have another question though (that I meant to ask the accountant but completely forgot about). If I bought bits and pieces for my business, in, say, 2012, but I never claimed the cost back, can I still do that now? Or is it a case that once you miss the opportunity to do it at the correct time, you screwed yourself out of it?


I just ask as I spent a fair few euro on bits and pieces when I was starting out, but, as I just wanted a quiet life, had no accountant (Couldn't justify the cost of one, even though it, ironically, would have saved me money) and had no idea of how revenue operate, I never bothered trying to claim for them (mostly due to ignorance of how the system works, and not knowing how to say 'I paid €X for this, can I deduct that please').

Would I be right in saying that those are long gone opportunities?

DmanDmythDledge

Deleted User wrote: »

I do have another question though (that I meant to ask the accountant but completely forgot about). If I bought bits and pieces for my business, in, say, 2012, but I never claimed the cost back, can I still do that now? Or is it a case that once you miss the opportunity to do it at the correct time, you screwed yourself out of it?


I just ask as I spent a fair few euro on bits and pieces when I was starting out, but, as I just wanted a quiet life, had no accountant (Couldn't justify the cost of one, even though it, ironically, would have saved me money) and had no idea of how revenue operate, I never bothered trying to claim for them (mostly due to ignorance of how the system works, and not knowing how to say 'I paid €X for this, can I deduct that please').

Would I be right in saying that those are long gone opportunities?

There would still be an opportunity to claim for those expenses (once they are qualifying expenditure of course) as you have a 4 year timeframe to amend an income tax return submitted to Revenue.

If it was a case that you were not trading then but incurred expenditure related to the subsequent trade that commenced this would also be deductible in the first year of trading, so long as the expenditure was incurred within 3 years of the commencement of trade and would be normally deductible if incurred when the trade has commenced.

Oh okay. I didn't realise that. Cheers for the heads up.

I'd have spent the guts of about €3,000 on work gear in the first year I'd say, with the help of a loan from my trusty credit union.

Can I ask, for the sake of, as above, an easier life, would I be able to add expenses on to, for argument sake, this years costs, and submit them next year?

So even though a something was purchased last year, i'd say i bought it this year? Or is that putting myself in trouble altogether? My issue is that keeping receipts wasn't a strong point. However, if Revenue were to take any kind of interest in me, and looked into my purchases, they could see that I physically have stuff that was never claimed for.

(in other words, if Mr Inspector arrives at the front door, I can physically show him pieces of equipment. that I own and use for business, that have never appeared on a tax return before. So it's not like I'd be trying to pull the wool over their eyes and claim for things I never bought, or lie and say I bought some things twice or three times, when in reality I only bought them once).

But I do have a few bits that I'm looking at now, that I never even considered I could claim for, that would probably be worth in the region of €2k (and thats just stuff that's still physically here. There are bits and pieces I bought that broke or died along the way, which I wouldnt claim for as I wouldn't have them to show).


I have to meet with my accountant again next week to actually sort out paying revenue, and paying the accountant himself, so I'll run all this by him, but just thought I'd ask here as ye guys are fairly knowledgeable and it's always good to have a bit of an idea of what's going on before talking to accountant himself as then I'm not going in completely blind and stumbling over myself trying to remember things or making a fool of myself.

Apologies if I'm asking a lot of questions that I should really already know the answer to, but I'm just not fully informed on this kinda stuff and, as I say, accountant is good, but I feel like boards a bit more informal and relaxed way of learning things and getting thoughts and opinions).