I wondered if anyone could tell me how you standing on claiming interest on a car loan.
I am talking about a partnership and one of the partners has just purchased a car which we are looking to put on the books, but obviously this car will have both personal and business use. I believe I can claim Capital allowance on the value of the car and apportion this between the personal and business use, as I can with the fuel, insurance, Road Tax etc.
However as the loan is soley for the purchase of the car, can I do the same and apportion the cost of the loan (i.e. the interest) or would this loan be considered to have duality of purpose? and therefore not allowable?
The duality of purpose issue usually arises dependant upon the motive of the purchase.
My understanding at least is that if your purpose was to buy the car for personal needs and then use the car in business, to then apportion, this is when we can become unstuck.
If you buy for business and the personal use is secondary then you're fine, dependant upon HMRC ever questioning.
Same with travel, what was the primary purpose? To go shopping or to meet a client, with shopping being merely because you were there.
My interpretation could be wrong -
So, on that note,
Yes apportion what is used in the business. But if it is a new car would it not be better to at least consider the MAP as it's unlikely to need heavy maintenance and such. Also saves apportioning CA as there won't be any.
I'm assuming it isn't a LLP.
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Johnny - Owner of an overly-active keyboard.
A man who can read, yet doesn't, is in no way wiser than a man who can't.
The business is a partnership not a LLP; the turnover was less than the VAT threshold when the car was bought so I believe that we can look at both methods. We are apportioning the motor expenses as 25% business and 75% private use, and I believe that maybe we can claim the same percentage of the loan interest with both methods?
Getting the documentation to do the calculation has taken some time to be honest, which is why I'm probably favoring the MAP but suspect it would be more tax efficient to use the apportionment method. Any I just couldn't work out if the interest on the loan would be allowable. The loan has been taken out solely for the purchase of the car, so I think my understanding is correct that we can apportion the cost of the loan as per the motor expenses?
