Private Hire Vehicles

I have started a taxi business aiming at the executive market this month. I have purchased a new vehicle for a total cost of 50,000 that is exclusively used in the business on the same date. How is the cost dealt with for tax purposes?

1st June 2008

The total cost of the vehicle will qualify for Capital Allowances, and assuming it is a qualifying hire car it will qualify as Plant and Machinery. Up until April 2008 First Year Allowances were available on the cost of the vehicle in the period the vehicle is acquired. As the vehicle was acquired after April 2008 it will qualify under the new Capital Allowance system, in which small business are entitled to Annual Investment Allowance.

This will effectively allow businesses to claim relief in full for up to 50,000 Plant & Machinery assets acquired in the year. The annual investment allowance however, does not apply to cars, so we would recommend you speak to your accountant to confirm if the definition of a qualifying hire car pre April 2008 (a car provided wholly or mainly for hire to or the carriage of members of the public in the ordinary course of a trade and satisfies one of the three conditions outlined on the HMRC website) is still relevant to the new system.

By Jo Nockels

Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

Call us today to make an appointment at your local office

0800 0523 555

Or submit an enquiry