The capital allowances available to taxi drivers on vehicles in the financial year 2007-08 included a 50% first year allowance where the taxi was classed as a commercial vehicle with a 25% writing down capital allowance on the balance in subsequent years. There is a £3,000 restriction on the capital allowances that may be claimed on cars which is not applicable to commercial vehicles.
The first year allowance may only be claimed by vehicles classified as commercial vehciles. Such vehicles would include mini buses and Hackney carriages but not private vehicles used as a taxi.
The rules on capital allowances changed with effect from the current financial year commencing 6 April 2008.
For 2008-09 the first year allowance has been diiscontinued and replaced with a 100% Annual Investment Allowance (applicable to fommercial vehicles only). The maximum that can be claimed in the financial year is £50,000 and if the purchase was made during the year then the amount that can be claimed is reduced pro rata. For example if an Hackney carriage was bought for £30,000 6 months into the financial year the maximum claim would be £25,000.
The capital allowance writing down allowance which was previously 25% was reduced to 20% and would be applicable to private vehicles used as taxis, including the first year of purchase and also restricted to a maximum of £3,000 in any single tax year.
Taxi drivers who prepare their own taxi driver accounts may wish to visit www.diyaccounting.co.uk/taxi.htm which has a taxi driver accounts package (priced at £11.99) written on excel templates that automatically the calculation of capital allowances and produces an excel copy of the new tax return. |