SE36790 - Deductions from emoluments: capital allowances: particular items of machinery or plant: motor vehicles and bicycles: special rules for calculating balancing allowances: 2000/01 and earlier years
Section 27(2C) CAA 1990
Remember that employees cannot claim capital allowances for a
car, van, motor cycle or bicycle after 5 April 2002 (see
SE36520). And there are special
transitional arrangements for 2001/02 (see
SE36791). The guidance on this page
applies in all other cases
Capital allowances are not available in a year when an
employee is in a Fixed Profit Car Scheme, or claims an expenses
deduction using Inland Revenue Authorised Mileage Rates (see
SE36780). In a year when there is no
claim to capital allowances, the value of the vehicle will not have
been written down under the capital allowances code. So if the law
had not been changed, it would be possible for an employee to opt
out of the FPCS in the year in which the car was sold and claim a
larger balancing allowance than would have been available if
writing down allowances had been claimed every year, even though
relief for that depreciation had already been given through FPCS.
Starting with the year 1990-91 as regards motor vehicles (and
from 1999/2000 onwards as regards bicycles), the balancing
allowance for the year of assessment in which the disposal takes
place is
| [the qualifying
expenditure at the beginning of the year (if no capital allowances
have been claimed, this may be the original cost)
less the disposal value (see SE36690)] |
X | A
-- B |
Where:
- 'A' is the number of years of assessment in which the taxpayer has
- been an employee and
- owned the motor vehicle or bicycle and
- claimed capital allowances on the motor vehicle or bicycle in respect of its use in the employment.
- 'B' is the number of years of assessment in which the taxpayer has
- been an employee and
- owned the motor vehicle or bicycle and
- had the right to make a claim to capital allowances on the motor vehicle or bicycle in respect of its use in the employment.
Note that all years of assessment are counted as full years for
the purpose of this calculation, even if one or more of them is in
fact a part year (for example, if one of the years is the year in
which the employee started the job). See example
SE36935.
The special rule described above does not apply to balancing
charges. A balancing charge on the disposal of a motor vehicle or
bicycle is calculated in the same way as for any other asset (see
SE36680).
