Would you consider the use of a motorcycle in your business?
In recent years, the capital allowances available on cars have been increasingly restricted based on the CO2 emissions in order to encourage business owners to consider more environmentally friendly options when purchasing new vehicles.
Cars purchased as of 6 April 2012 with CO2 emissions between 110g/km and 160g/km would qualify for an 18% annual writing down allowance whilst cars exceeding 160g/km only 8%. (The CO2 emissions of a car can be found on it’s V5 documentation)
At this present time, cars with CO2 emissions below 110g/km are eligible for 100% first year allowances, however there are limited options available with such low CO2 emissions and this generous allowance may not continue into the future.
Prior to April 2009, motorcycles were included under the HMRC definition of a ‘car’ however motorcycles purchased after 6 April 2009 do not fall into this category and therefore offer more scope for capital allowances, with up to 100% of the cost of the motorcycle available for deduction in the financial year it was purchased.
Any allowances available on cars would be subject to a reduction for private use, as would the allowances available on a motorcycle, the main difference being the amount of allowance available to begin with.
For example, for the financial year in which it was purchased, a car costing £10,000 with CO2 emissions of 130g/km would qualify for a writing down allowance of £1,800 (£10,000 @ 18%).
The same scenario where the car has CO2 emissions of 170g/km, the allowance would only be £800 (£10,000 @ 8%).
A motorcycle costing £10,000 however, given that it would not fall under the HMRC definition of a ‘car’, would qualify for a £10,000 writing down allowance in the financial year of purchase under the Annual Investment Allowance Scheme (capped at £25,000 p.a. for the year 6 April 2012 to 5 April 2013).
What about the small print? Obviously you would have to be able to justify that it is reasonable for you to use your motorcycle within the course of your business i.e. it would be highly unlikely that you could class a motorcycle as a suitable method of transport for a plumber who would have to carry tools etc.
Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.
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