Bought a car for part time work

bungaro79

Hi all
I'm trying to help my uncle get his form 11 sorted before next week's deadline. He bought a second hand car for about 4.5k and a laptop last year which he uses mainly for work. He is retired but does deliverys 3 days a week. Can he claim these purchases on his form? I was thinking he could but maybe only 3/5s or 3/7s of the cost. The car is rarely used for personal use so would the same go for the motor expenses like tax, insurance, diesel, etc??
Thanks

exaisle

bungaro79 wrote: »

Hi all
I'm trying to help my uncle get his form 11 sorted before next week's deadline. He bought a second hand car for about 4.5k and a laptop last year which he uses mainly for work. He is retired but does deliverys 3 days a week. Can he claim these purchases on his form? I was thinking he could but maybe only 3/5s or 3/7s of the cost. The car is rarely used for personal use so would the same go for the motor expenses like tax, insurance, diesel, etc??
Thanks

No. They aren't purchases, they're assets. You can claim 12.5% Capital Allowance on the car and laptop but you have to disallow the proportion of the personal usage of the car...so if the car was used 20% of the time for personal use, you'd claim 12.5% of the total each year, of which only 10% (of the total) is allowable.

You also have to disallow the same proportion of his total motor expenses ie. tax, insurance, diesel etc.

mickdw

Is there not a quirk in the tax law if the car is 2008 plus and an emissions band a b or c stating that in that case, it's not the purchase cost that matters, only the 24000 max figure that is allowable.
It seems strange but the document re car allowances seems clear cut.
I'd like to hear a tax professionals opinion on that though.

exaisle

mickdw wrote: »

Is there not a quirk in the tax law if the car is 2008 plus and an emissions band a b or c stating that in that case, it's not the purchase cost that matters, only the 24000 max figure that is allowable.
It seems strange but the document re car allowances seems clear cut.
I'd like to hear a tax professionals opinion on that though.

You already heard one.

OP stated that his uncle paid €4500 for the car so the €24000 limit doesn't come into it...

mickdw

But the document appears to state that the 24k limit applies regardless of cost whereas with a band d car, the actual cost or 12k limit applies. There is no mention of actual cost when dealing with a band A to C car.
I've had 2 accountants argue each way on this so that's why I'd like to hear further opinion.

exaisle

I assume you mean whether the amount allowable for Capital Allowances of €24000 is the actual amount, regardless of the cost of the car, or whether it's the limit that can be claimed?

I grant you...the documentation is unclear...however, it seems unlikely that Revenue will grant capital allowances of 12.5% of €24,000 on a vehicle that cost far less.
The amount of €24,000 is the maximum that can be claimed for a class A/B/C vehicle regardless of how much MORE the vehicle cost. If the vehicle cost less than €24,000, then that's the amount on which Capital Allowances can be claimed.
The maximum that can be claimed on a class D/E vehicle is more prohibitively restricted, as in 50% of the cost subject to a maximum of 50% of €24,000.

(The temptation would be to buy a car for €500, use it entirely for business purposes for 1 day per year by propping an advertising hoarding on it and then claim capital allowances of €24,000 x 12.5%= €3000 per annum......). I can't see Revenue allowing that....

mickdw

Yes when I saw the wording myself, it looked rather odd but it is being used daily now by people driving cheap cars as a tax break.
It seems to me it was written that way to give something back to people who bought new cars in the right bands back in 08 not foreseeing that an 08 car can now be had for buttons.

Heisenburg81

mickdw wrote: »

Yes when I saw the wording myself, it looked rather odd but it is being used daily now by people driving cheap cars as a tax break.
It seems to me it was written that way to give something back to people who bought new cars in the right bands back in 08 not foreseeing that an 08 car can now be had for buttons.

The €24,000 applies even if the car is not new and is less than €24,000 cost, once in the suitable emissions band.
You get €12,000 deemed cost for tax purposes for Cat D & E I believe.
Note Revenue's Operations Manual where I quote "Both new and second hand".
Specifies the allowable costs as being irrespective of the actual costs.
Of course, upon scrappage etc or otherwise disposed the proceeds are uplifted at 24k/actual cost etc to avoid artificial balancing allowances.
S 380L TCA states €24,000 regardless of cost of car etc and goes on to cover other bands.

mickdw

For band d and e, it's more normal. It's up to 12000. So the actual cost or 12000 whichever is less.

Heisenburg81

mickdw wrote: »

For band d and e, it's more normal. It's up to 12000. So the actual cost or 12000 whichever is less.

Its €12,000 irrespective of actual cost.

exaisle

This seems likely to be the subject of, for want of a better expression, widespread abuse....*scouring ads for a low emissions banger...*

exaisle

Heisenburg81 wrote: »

Its €12,000 irrespective of actual cost.

I respectfully disagree...in classes D&E...."either half the car value threshold of
€24,000 or half the cost of the car, whichever is the lower"

https://www.revenue.ie/en/tax-professionals/documents/notes-for-guidance/tca/part11c.pdf

However, regarding my earlier post where I said €24000 was the maximum that can be claimed....I was wrong and I'm happy to admit it. I'll be reviewing my own Cap Alls computations shortly... :-)

Heisenburg81

exaisle wrote: »

I respectfully disagree...in classes D&E...."either half the car value threshold of
€24,000 or half the cost of the car, whichever is the lower"

https://www.revenue.ie/en/tax-professionals/documents/notes-for-guidance/tca/part11c.pdf

However, regarding my earlier post where I said €24000 was the maximum that can be claimed....I was wrong and I'm happy to admit it. I'll be reviewing my own Cap Alls computations shortly... :-)

You are right on the 12k.
But you are incorrectly correcting yourself on the 24k! It is the max for A B and C cars...

mickdw

You are confusing the issue. He corrected his opinion re 24k being claimable regardless of cost on bands a b and c. There is nobody disputing anything about the 24k figure itself being the amount.

bungaro79

Thanks for the replies. I think the car he bought is a 2005 so that should rule him out of yer discussion!

ebbsy

You also have to add back the depreciation on the car and assets.

Get somebody who knows what they are doing I would say.

bungaro79

i tried telling him that weeks ago ebbsy!! lastminute.com

are you saying now though that he can't claim the depreciation on the laptop and car so??

ebbsy

bungaro79 wrote: »

i tried telling him that weeks ago ebbsy!! lastminute.com

are you saying now though that he can't claim the depreciation on the laptop and car so??

He can, they come off the profit but he has to add it onto the profit for income tax purposes.

scheister

With regarads to the 24k limit AFAIK it is the case that you get the relief at this value not the price you paid. Where people are getting mixed up its on original market value not purchase price. While it is now a moot point as car is from 2005 so the post 2008 rules dont apply. You would look at the value of the car when new not what price it was on the second hand market