12 June 2017
I was sitting in the back of a limousine recently, sadly on the way to a funeral rather than a swanky event. Trying to think of anything other than the impending funeral, rather strangely capital allowances came into my head and whether certain vehicles, including the limousine in which I was sitting, were more attractive for capital allowances than other vehicles?
For a trading business, a vehicle, be it a car, van or lorry, may represent a significant asset and hence capital spend. Obtaining the best rate of capital allowances is therefore essential. Currently, rates of capital allowances are obtainable at 100%, 18%, or 8% and whilst 100% relief is obviously desirable, this is limited, certainly within the automotive field, to a certain category of vehicle.
100% relief is denied to anything that is categorised as a car, as defined by s268A of the Capital Allowances Act 2001. Is a car that difficult to identify? Apparently, yes; as the definition at s268A is as follows:
‘Car’ means a mechanically propelled road vehicle other than:
a) a motor cycle;
b) a vehicle of a construction primarily suited for the conveyance of goods or burden of any description; or
c) a vehicle of a type not commonly used as a private vehicle and unsuitable for such use.
There are other sections within the Act dealing with electrically propelled vehicles and cars with low CO2 emissions which would need to be considered in all other cases, but in the scenario I was in these were not relevant.
I did console myself that using the definition within the Act that the hearse would certainly attract 100% allowances as it would fall within b) above. The limousine however, I would suggest would fall within c) at best and so a 100% claim may be available.
I was then brought back to the real world as we arrived at the funeral, which all went as well as can be expected, but the moral of the above is you do need to be very careful over vehicle acquisitions and explore what the vehicle is and what it is to be used for to ensure the correct and most efficient amount of allowances are claimed.
If you need any further advice then please contact me your local UHY contact. Alternatively, if you would like to read more of our automotive related blog posts, please click here.
