Capital allowances for sole traders and partnerships

Produced by a Tolley Owner-Managed Businesses expert

Owner-Managed Businesses

Guidance

Some aspects of capital allowances only apply to sole traders and partnerships, these are as follows:

•
private use of assets which qualify for capital allowances eg cars
•
capital allowances on know-how
•
capital allowances on patents

Each of these is detailed further below.

Private use adjustments

Sole traders or partnerships may use assets for both business and private purposes. For example, it is common for a sole trader to have a car which is used mainly for business, but at the weekends or in the evenings, used for private purposes.

If all the costs of running the car are paid for by the business, the tax computations must be adjusted to take account of the private use. Therefore, motor expenses in the profit and loss account are reduced for the private element of those costs.

Likewise when considering the capital allowance computations, the capital allowance must be reduced by the private element. The private element is normally given as a percentage which is then applied to the computations. In practice,

Access this article and thousands of others like it
free for 7 days with a trial of Tolley+™ Guidance.

TAKE A FREE TRIAL

Popular Articles

Personal Tax

Payment of tax due under self assessment

Payment of tax due under self assessmentNormal due dateIndividuals are usually required to pay any outstanding income tax, Class 2 and Class 4 national insurance, and capital gains tax due for the tax year by 31 January following the end of the tax year (ie 31 January 2025 for the 2023/24 tax year).

14 Jul 2020 12:52 | Produced by Tolley Read more

Personal Tax

Losses on shares set against income

Losses on shares set against incomeUsually, allowable capital losses can only be set against chargeable gains. If the losses are not fully utilised against gains in the year in which they arise, the excess is carried forward to use against future gains. See the Use of capital losses guidance note

14 Jul 2020 12:12 | Produced by Tolley Read more

Trusts and Inheritance Tax

Corrections and amendments to the IHT account

Corrections and amendments to the IHT accountThis guidance note explains how to deal with changes to the taxable values in the original inheritance tax account.Why do amendments arise?When the IHT account is first submitted to HMRC, it is based on information available at an early stage of the

14 Jul 2020 11:20 | Produced by Tolley Read more

��Ӱ��