CA23510 - Plant and Machinery Allowances (PMA): cars: outline - meaning of ‘car’
Where expenditure was incurred (CA11800) on a car
- before 1 April 2009 by a person within the charge to corporation tax or
- before 6 April 2009 by a person within the charge to income tax,
and the car cost £12,000 or more, the expenditure was allocated to a single asset pool. This is because
- WDAs on such expenditure are usually restricted to an annual amount of £3,000 (the rules that apply to expenditure incurred before April 2009 do not apply to qualifying hire cars - CA23515) and
- the allowances on the car have to be calculated separately so that the restriction can be applied.
Where a person makes a contribution towards the cost of a car, the £3,000 limit is divided between the person making the contribution and the recipient (CA23520). There is anti-avoidance legislation that stops a person creating a balancing allowance by selling a car to a connected person for a nominal amount - CA23527.
These rules do not apply to expenditure incurred on a car on or after 1 or 6 April 2009, instead the capital allowances treatment is determined by the car’s carbon dioxide emissions (CA23535). Expenditure incurred before April 2009 will never be fully within the new rules, although transitional rules may apply (CA23530).
For PMA purposes a car is a mechanically propelled vehicle except a vehicle:
- constructed in such a way that it is primarily suited for transporting goods of any sort, or
- of a type which is not commonly used as a private vehicle and is not suitable for use as a private vehicle.
Treat a car that is capable of being used as a private vehicle as a car for PMA purposes no matter how the taxpayer actually uses it (Roberts v Granada TV Rental Ltd 46TC295).
Do not treat the following vehicles as cars for PMA purposes:
- a car that it is illegal for a taxpayer to use as a private vehicle even if the taxpayer sometimes uses it as a private vehicle (Gurney v Richards 62TC87)
- cars used by a driving school and fitted with dual control mechanisms (Bourne v Auto School of Motoring (Norwich) Ltd 42TC217)
- emergency vehicles. A vehicle equipped with a fixed blue flashing light on the roof which can only be used on the road by a fire officer or police officer is an emergency vehicle
- Hackney carriages ( traditional ‘London black cab’ type vehicles)
- Double cab pick-ups with a payload of one tonne or more. (Payload is the difference between a vehicle’s maximum gross weight and its kerbside weight.)
Motor cycles are specifically included in the definition of a car for capital allowances purposes where the expenditure was incurred before 1 or 6 April 2009. Expenditure incurred on a motor cycle after these dates is not treated as being on the provision of a car. A motor cycle is defined (in the Road Traffic Act of 1988) as a mechanically propelled vehicle, other than an invalid carriage, with less than four wheels. The unladen weight must not be more than 410 kilograms.
Quadricycles (quadbikes) do not meet the definition of a ‘motorcycle’. If they are road vehicles within the definition above then they will be treated as cars for capital allowances purposes.
A hire car for a disabled person is a car provided wholly or mainly for use by people receiving certain types of disability living allowance or a mobility supplement. In more detail, the cars that are in this category are cars provided wholly or mainly for people receiving:
- a disability allowance under the Social Security Contributions and Benefits Act 1992 or the Social Security Contributions and Benefits (Northern Ireland) Act 1992 because of entitlement to the mobility supplement
- a War Pensions mobility supplement under the Personal Injuries (Emergency Provisions) Act 1939
- a mobility supplement under an Order in Council made under section 12 of the Social Security (Miscellaneous Provisions) Act 1977 or
- a payment that appears (to HM Treasury) to be similar to those above.
There is guidance on number plates at CA21250.
Self-employed taxpayers may use mileage rates to compute their vehicle expenses, including capital allowances, if the annual turnover of the business is less than the VAT registration threshold. Further guidance can be found at BIM47701. These rules are unaffected by the FA2009 changes.