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FINANCE
If your business involves you having to be mobile then the choice of vehicle is vitally important, not least in financial terms. It may look nice to have a Hummer to ride around in between appointments but it can cost you a substantial amount of money, and in these belt-tightening times do you really want – or need - a car that drains your wallet, and not just at the service station?
In taxation terms you can claim back the cost of running a vehicle for business use, i.e. petrol/diesel, servicing, tyres, tax and insurance. This can also be adjusted for any “private use” an offset against your business income. What you can also claim is a percentage of the actual purchase cost of the vehicle each year – known as a Capital Allowance. This varies according to the type of vehicle that you use, from 100% of the cost of the vehicle to as little as 10%. The new rules (from April 2009) are based around the principle of the ‘greener the car - the more you can claim’. Greenness is measured by the amount of CO2 your car produces per kilometre.
The table below gives examples:- Car type
CO2 Emissions less than 110 g/km
CO2 Emissions over
160 g/km Van
Allowance available per annum 100% of the cost of the
vehicle in year of purchase
CO2 Emissions between 20% of vehicle cost per annum 111 – 160 g/km
10% of vehicle cost per annum 100% in year of purchase
There is a full list of petrol and diesel cars with CO2 emissions under 110g/km available from http://www.vcacarfueldata.org.uk. You can also search for CO2 emissions for other vehicles which are not on that list.
So if you were to buy a car costing £10,000 with a CO2 emissions rating of less than 110g/km, then you could claim all £10,000 against your profits in the corresponding tax year, whereas a similar value car with emissions over 160g/km would only
give you a £1,000 claim. At a tax rate of 20% that could cost you £1,800 in additional tax – if you are a 40% tax payer that goes up to £3,600. If you were to buy a van, however, no matter what the emission rating you, could claim the full value in the year of purchase. Please remember that the exact figures may differ according to your particular circumstances.
Armed with this information you may want to consider your next business vehicle carefully – remember, vanity can be extremely costly!
THE AUTHOR
Jamie Crampton qualified as a Chartered Management Accountant in 1995 and in 2008 set up Accounting 4 Fitness, dealing primarily with clients in the fitness industry. In addition
to this he advises personal training students on premier training courses on self employment, and also does freelance work with accounting students at the University of Bedfordshire.
Nice wheels – but do they come with extras?
If number crunching’s not your style don’t worry, financial expert Jamie Crampton’s here to help
Does your financial fitness match your personal fitness?
Whether you are an established or newly formed business, or thinking about starting, we can help you. We provide advice on Accounting,
Self Assessment, Income & Corporation Tax, VAT, PAYE and many other financial services at extremely competitive rates, which can be paid monthly. We are experts in all aspects of Leisure & Fitness industry accounting and can easily arrange personal consultancy sessions that fit in with your schedule, anytime and anywhere in the UK.
For more information call Jamie Crampton, ACMA (T) 01234 267860 (M) 07830 225612 (E) Jamie@a4f.co.uk.
Accounting 4 Fitness
12 Boxgrove Priory, Bedford MK41 0TQ. Registered with the Chartered Institute of Management Accountants as a Member in Practice.
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