Driving Instructor's Car

[TrishEvans]

My son is a self employed driving instructor. He bought a new car for £6,500 when he started in 2003. He claimed 25% Capital Allowance in 03-04 & 04-05 an will claim again for 05-06. His tax year ends 31/07.
He now wants to pass this car on to his wife & is replace it by leasing.
Please can someone tell me what the tax implications would be.
Do I simply enter a balancing charge of the remaining 25% with his capital allowance claim for 05-06 and charge it to his drawings - and are there any tax implications of leasing that he should be aware of.

[deanshepherd]

Assuming the car has dual controls then it does not follow the normal capital allowances treatment for private cars. This means that your son may have claimed less CA's than he was entitled to in 2003/04.

However, in answer to your question, the car will be treated as sold at open market value and charged to drawings. This will either create a balancing allowance or balancing charge in the CA comp.


Dean
dean.shepherd@mmi-online.co.uk
MMI Accountancy
www.mmi-online.co.uk

[TrishEvans]

Thank you deanshepherd
He's running on a shoestring so I do his accounts for him. I did ask Inland Rev for advice when doing his 2003/04 tax form & they did not mention extra capital allowance for dual control. Can you tell me where I can find out more as I want to get it right this time - also is there anything I can do about claiming the extra for 2003/04?
Trish Evans