New car - tax write-off?

Yellow belly

I've recently gone self-employed and in tandem with this am thinking of buying a newer car..it would be for use with work and so I'm wondering as to whether I can write it off against my tax.

Can anyone advise?

Thanks

TheLedge

yeah, i think you can write off the VAT paid on the car. I was going to do this a couple of years ago by buying a van and registering it under my new business' name. In the end i couldnt get insurance on a van because i was too young.

There may be a stipulation somewhere that it has to be a commercial vehicle (i.e a van or jeep type), and not just any new car you like.

Enii

I think you can either claim the VAT back or write off your mileage as expenses but not both. You would want to chat to an accountant first as writing your mileage can be useful to run your company at a loss and so as to pay very little tax. What type of business is it? Will you travel much?

Lawdie

TheLedge wrote:

yeah, i think you can write off the VAT paid on the car.

You can only claim VAT back on a commercial vehicle.

The car is claimable up to €22,000 MAX in a writing down allowance or capital allowance.

What are Capital Allowances? (Also called Writing Down Allowances or WDA’s)
Simply put, the method of depreciating ( writing off the cost ) vehicles or a method used by the Government to stimulate investment in particular areas of industry, business and commerce

How do they work?
A set percentage of the capital cost of a vehicle may be offset against the owner’s tax bill at the end of their financial year

What is the current percentage?
12.5% per annum on a straight line basis. (The figure was 20% until 1st January 2003) This equates to a maximum of €2,750 per vehicle per annum, as the Government places restrictions on passenger vehicles over €22,000 in price

NOTE:- there is NO MAXIMUM per year in the case of Commercial vehicles.
Certain development areas can attract a 100% first year allowance (e.g. the IFCS in Dublin). Taxis, private hire vehicles and daily/short term rental cars are treated as commercial vehicles

Example: Car costing €25,000
Anticipated use 3 years
Corporation Tax level 12.5%

Taxation Allowances:
Capital Allowances Year 1 €2,750
Year 2 €2,750 Year 3 €2,750 €8,250
Tax saved = 12.5% of allowances
= €8,250 X 12.5% = € 1,031

Net Cost = Original Cost less tax saved ( €25,000 - €1031)
= €23,969

You should check your Tax level and discuss this with an accountant before taking the above information as factual!

is_that_so

Leasing is another option which is a legitimate business expense. Rates in financial institutions tend to be good for this kind of thing. Again check with your accountant to see how it might suit you.

Lawdie

is_that_so wrote:

Leasing is another option which is a legitimate business expense. Rates in financial institutions tend to be good for this kind of thing. Again check with your accountant to see how it might suit you.

Leasing falls under the same area, its not a commercial vehicle and therefore cannot get VAT returned