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,

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