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Porsche plans
Key points
- The trader can claim capital allowances on the cost of a car purchased outright.
- The rate of relief is determined by the car’s carbon dioxide emissions.
- Private use by the sole trader reduces the tax relief available for the car however it is acquired.
- The extra cost of a hire purchase agreement is written off to the profit and loss account over the period of the agreement and allowed for tax.
- Unusually tax relief is given on the depreciation charge of finance leased assets.
- Tax relief for both finance leased and operating leased assets is restricted where there are high carbon dioxide emissions and where there is private use by the sole trader.
Consider the situation where a sole trader needs a car to use in their trade. They have seen a nice new red Porsche Boxster that will fit the bill nicely and were about to pay...
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