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Taxes - Cars - Claiming Capital Allowances

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As someone who has completed his own tax return for the past 20+ years and who doesn't normally have a problem doing so....I have recently struggled with claiming car capital allowances.

I recently discovered that my Self Assessment Tax Return that I submitted back in August last year for 2015/16 tax year was incorrect. I've had to amend it this week and resend to HMRC.

The problem is their continuous adjustment of the CO2 band which determines whether one's car falls into the 8% or 18% allowance band. It's quite important to get it right because in my case I found the taxman owes me £670.

So, for those of you who claim capital allowances for use of your car in your rental business......do check that either you or your accountant has calculated the correct amount.

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I have just come across these tax deductible allowances you guys may or may not know about.  

Home as office costs:These can vary depending on the size of a landlord’s property business. Every landlord can claim either a flat rate or calculate an amount based on time and space used for business at home. Either claim a flat rate of £18 a month or claim up to £26 a month based on simplified accounting rules or more by collecting bills and working through the claim

 

If you are part of a group of friends or family owning letting property, you cannot claim compensation for spending your own time on business tasks but you can pay a non-owner for doing the work for you. The proviso is the amount paid reflects the work they carry out. The payment then goes into the accounts as a business expense to reduce taxable profits. This tax strategy is also a good way of transferring the burden of pocket money for teenagers to your property business. Keep the amount below the national insurance threshold and it’s a win/win for the business and the worker

 

Business owners can claim up to £150 each every tax year on an annual dinner, including hotel costs and travel.

 

https://www.gov.uk/tax-relief-for-employees/working-at-home

https://www.gov.uk/simpler-income-tax-simplified-expenses/working-from-home

https://www.gov.uk/expenses-benefits-social-functions-parties/overview

 

 

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Hopefully things haven't changed for my style. I continue to claim for business mileage. As I intentionally don't drive high value cars it gives advantage, and no consideration for capital write down or other motoring expenses. 

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Grampa,

I claim home office costs. As I understand it there are numerous accepted ways of arriving at an amount that can be claimed.....all subject to the size of the business. Obviously landlords with 1 or 2 properties would claim less than landlords with 20 properties etc. If it helps anyone......the way I calculate a figure is to total the costs of running my home.....mortgage/loans, utilities, council tax, insurances, repairs & maintenance etc. Then I divide that figure by the number of usable rooms in the property....excluding hall, landing, cloakrooms, bathrooms, utility rooms etc. I then apply a percentage to that figure that represents my time spent running my business......and that's what I claim on my SATR.

You've made some good points about claiming for the costs of running the business but, my understanding is that no landlord can claim for their own time spent running their business. If the landlord did claim it would be pointless. The business would save tax but the landlord recipient would have to declare the income and pay tax on it.....so nil advantage.

CoR,

In your shoes I would do a back to back comparison between claiming the 45p mileage allowance vs claiming capital allowances. You might find capital allowances will provide a higher figure to offset against your income.....especially if your vehicle CO2 output puts it in the 18% band.

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I hadn't realised that you could put the car itself against tax , I keep a diary of mileage and tally at the end of the financial year and multiply by .45ppm. My car is on a 3 year lease plan from Kia , can I claim back the £305 .00 I pay monthly ?

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You must decide which method of tax allowance you will claim for a vehicle at the offset, and stick with that method during the usage of that vehicle.

The business mileage log is 45ppm for the first 10,000 miles and then 25ppm there after.

 

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Only 300 ?

Is it really possible to do so few miles on business ?

Even if you have only one property and its local, let's say 3 miles from where you live, surely you drive past it once a week to check on your investment ? So, 6 mile round trip x say 45 weeks a year = 270 miles

Then what about visiting lettings agents, repairs & maintenance, buying materials, viewings, moving tenants in or out and the myriad of other trips required to operate successfully ?

You are joking surely ?

 

 

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Typhoo ?

The cost of tea is definitely not allowed as a business expense.

Although if one is providing cups of tea, biscuits or food to contractors carrying out repairs or maintenance then the cost can presumably be included as part of the cost of the work.......

 

 

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When providing promotional material to contractors/ clients the promotional material should carry company identification/ logo. Perhaps mugs and biscuit packets would be considered to be compliant if carrying the words "Compliments of the Scum Landlord", I can't imagine any MP arguing with that.

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Hi all, interesting thread.

 

A rule that stops me from claiming travelling expenses is quoted below. I was surprised and disappointed to discover this because my journeys certainly fit the “wholly and exclusively” criterior.

 

 

• Office outside of home


If the property business is managed from an office outside of the home then HMRC deems the business not to be carried on at home, even if the property owner sometimes works from home. In this situation the cost of journeys between home and either the property let or that office base will not be allowable. However, the cost of travel from the office to and from the properties, and also between properties, will be allowable provided that the trip is incurred ‘wholly and exclusively’ for rental business purposes.

 

 

• Use of a letting agent

 

Some landlords engage a letting agent to manage the collection of rents, organise services etc. Where such an agent carries out all (or virtually all) the duties relating to the letting activity, it is likely that the rental business is being conducted through the agent. In such circumstances, the business 'base' is deemed to be the agent's office and as such travelling expenses from the landlords’ home to the property are not allowable but will be from the agents office to the property.

 

The above paragraphs are cut and pasted from:

 

https://www.taxinsider.co.uk/768-Claiming_Travel_Costs_in_Property_Rental_Businesses.html

 

 

Another rule I notice on this page is that if the travelling expenses are incurred while carrying out capital improvements, then these expenses are not allowed against revenue. 

 

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Hi Duck,

Thanks for that info. 

I would suggest that very few landlords, except those landlords with large numbers of properties, have a dedicated office outside of their home from which they manage their lettings business.......in fact, I don't know of any.

The majority of landlord's who contribute to this site self manage or just use an agent for a few aspects of the business. Those that have been landlords for a few years are usually very hands on.

It seems to make perfect sense to me that any travel associated with capital expenditure gets claimed against capital gains. Most people below the 40% tax threshold would, I'm sure, much  prefer to offset capital at 28% rather than revenue at 20%.

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That's interesting information Duck.

Firstly if I were to use an agent for my properties 80 miles away in N. Wales I would need to attend the agents office prior to attending my properties. In other words a very small part of the overall journey would be tax deductible. It effectively removes any incentive for me to use and agent.

Then if I go to N. Wales for property business, but continue to my boat (moored in Anglesey for obvious reasons) for leisure purposes again the whole journey wouldn't be deductible. What the tax man don't know don't hurt him as far as I'm concerned, and to learn more he'll need to follow me.

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