Professional Landlord car allowance

[tomki]

Person is a self employed and is letting a residential property and this is the only income what he/she has.
Residential Property is in her/his solo name. Accountant notified that, as you are letting the residential/investment property out and it is considered as an investment not a business, you can't deduct capital allowances in vehicle usage such as ( car written down allowance, HP Interest, Car Servicing, Insurance, Resident Permit, Road Tax, MOT ), generally car expenses when using to run a letting property, but in fact all these expenses have incurred during the tax year while using the car to run a property letting and is deducted as 35% business use and 65% personal use. How this can be consider investment as the property letting needs a physical servicing in regular bases (e.g replacing faulty defects in the property, changing furnitures or replacing them and other general works that are carried in letting the property) and car have to be used to carry such works.

HMRC explained note HS252 clarifies that such car allowance are tax deductible when running property rental business even property is let out in personal solo name but car has being used to run property letting.

My questions, is the accountant correct in this instance ? He has got wrong few time as is new chap in board.


I will appreciate if someone helps to clarifies these confusion.

Thanks

[King_Maker]

Your accountant is wrong.

You have 2 options :

1. Claim all the motoring expenditure plus Capital Allowances, but restricted to business use (usually done on a mileage basis).

2. Claim HMRC's approved businee mileage rates (45p/25p), plus any finance interest (restricted by private use).

[bd6759]

I guess this new accountant is quite old. Property income ceased to be treated as investment income in 1995!

The real question is whether or not travel to your houses is an allowable expense at all.

[tomki]

Guys thank you so much for help.

Here is latest update in this matter, Accountant is arguing that:
Person is not register as self employed (which is true), it's just letting his residential property in his solo name and all rental income is declared, he is paying only 20% income tax (which true) in rental income received. However he does have UTR number.

As he is not registered as self employed and only paying 20% income tax on rental income, and not paying Class 4 and Class 2 n.i.n, he cannot claim capital allowance and expenses on car that he uses for running his property rental business. He is arguing that, he can only claim business milage when using the car subject to business use.


Do you think accountant is right this time ?


Thanks

[King_Maker]

No, he is wrong......still.

[tomki]

No, he is wrong......still.

Thank you King_Maker.

To put it simple, any expenses and allowances are tax deducted if vehicle is being used to generate income and that income is declared to HMRC and pay income tax on it regardless if person is not register as self employed ?

[robbob]

Tomki

The uk property pages notes themselves clearly advise that capital allowances can be claimed on cars - this advise is clear and specific and relates to the exact page he will be completing on your return - if you email a copy of this to him and he still says no claim can be made it might be worth swapping to a new accountant. To be honest if you have originally pointed in the direction of HS252 that should have been enough nudging for him to work this out.

Boxes 31 to 34 Capital allowances
You cannot deduct the cost of buying, altering, building, installing or improving ‘fixed’ assets such as property, equipment or machinery. Nor can you claim depreciation or losses when such assets are disposed of. Instead, you can claim tax allowances, called capital allowances, for the cost of purchasing vehicles and equipment such as vans, cars, tools, computers and business furniture (even if the items were purchased under hire purchase) that you use in your property rental business

https://www.gov.uk/government/uploads/s ... -notes.pdf