Buying a new zero emission car within a business partnership
I'm trying to get my head around the tax rules for the above. I will be buying a zero emission electric car that will be used for both business and personal use. It will probably be purchased outright, so registered in my name, but could possibly be bought on a business lease.
I am in a business partnership with my wife, we are not a limited company.
My interpretation of HMRC rules is that if I buy the car outright I can claim capital allowance for the full car value (as it is a 0 emission EV) in the tax year I take delivery and then allocate 100% of the annual partnership business profit (which will be less than the value of the car) and so pay no income tax. In fact as there would be a difference I could also make a lump sum withdrawl from my pension (which is in drawdown) to ensure I use all available personal allowance.
As my wife would then have £0 income to declare, she could put her own personal pension into drawdown (we are both 55+) and make a lump sum withdrawl to use her £12,570 personal allowance, again with no income tax to pay.
This kinda seems too good to be true as the tax savings offset the price of the car by a significant amount, so I'd love to hear from anyone who has been through the same process or any professional who has definite knowledge.
I have a second, less important, question regarding how I then claim for usage of the car in the first and subsequent tax years, i.e. maybe I can't as I've claimed 100% capital allowance or do I claim using the standard HMRC simplified mileage allowance rates?