Session 2012 - 13
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Finance (No. 2) Bill


Finance (No. 2) Bill
Schedule 5 — Deductions allowable at a fixed rate

184

 

94C     

Provisions not applicable to certain firms

   

The provisions of this Chapter do not apply in calculating the profits

of a trade carried on by a firm for a period if one or more of the

persons who have been partners in the firm at any time during the

period was not an individual at that time.

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Expenditure on vehicles

94D     

Expenditure on vehicles

(1)   

This section applies if, in calculating the profits of a trade of a person

for a period—

(a)   

a deduction would otherwise be allowable for the period in

10

respect of qualifying expenditure incurred in relation to a

relevant vehicle (see subsection (2)), or

(b)   

a deduction would be so allowable in respect of such

expenditure but for the fact it is capital expenditure.

(2)   

In this section “relevant vehicle” means a car, motor cycle or goods

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vehicle that—

(a)   

is used for the purposes of the trade, and

(b)   

is not an excluded vehicle (see section 94E).

(3)   

The person may make a deduction under this section for the period

in respect of the qualifying expenditure.

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(4)   

If a deduction for a period is made under this section—

(a)   

no other deduction is allowed (for that or any other period)

in respect of the qualifying expenditure, and

(b)   

this section applies in relation to the relevant vehicle for

every subsequent period for which the vehicle is used for the

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purposes of the trade.

(5)   

The amount of the deduction is the appropriate mileage amount in

relation to the relevant vehicle for the period (see section 94F).

(6)   

In this section “qualifying expenditure”, in relation to a vehicle,

means any expenditure incurred in respect of the acquisition,

30

ownership, hire, leasing or use of the vehicle, other than incidental

expenses incurred in connection with a particular journey.

(7)   

For provision preventing capital allowances from being claimed in

respect of qualifying expenditure incurred in relation to a relevant

vehicle, see section 38ZA of CAA 2001.

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94E     

Excluded vehicles

(1)   

A car, motor cycle or goods vehicle that is used for the purposes of a

trade is an “excluded vehicle” for the purposes of section 94D if

condition A or B is met in relation to the vehicle.

(2)   

Condition A is that the person who is or has been carrying on the

40

trade has at any time claimed any capital allowances under Part 2 of

CAA 2001 in respect of any expenditure incurred on the provision of

the vehicle.

(3)   

Condition B is that—

 
 

Finance (No. 2) Bill
Schedule 5 — Deductions allowable at a fixed rate

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(a)   

the vehicle is a goods vehicle or a motor cycle, and

(b)   

any of the expenditure incurred on acquiring the vehicle has

been deducted in calculating the profits of the trade for a

period on the cash basis (see section 25A).

94F     

The appropriate mileage amount

5

(1)   

In calculating the profits of a trade for a period, the appropriate

mileage amount in relation to a relevant vehicle for the period is—equation: cross[char[M],char[R]]

   

where—

M is the number of miles of business journeys made by a person

(other than as a passenger) using that vehicle in the period,

10

and

R is the rate applicable to that kind of vehicle.

(2)   

The rates applicable are as follows—

Table

 

Kind of vehicle

Rate per mile

 

15

 

Car or goods vehicle

45p for the first 10,000 miles

 
  

25p after that

 
 

Motor cycle

24p

 

(3)   

In a case where the total number of miles of relevant business

journeys made in the period is greater than 10,000, the rate of 45p per

20

mile is available only in relation to 10,000 of those miles.

(4)   

“Relevant business journey” means any business journey made in

the period by a car or goods vehicle—

(a)   

that is used for the purposes of the trade, and

(b)   

in relation to which section 94D applies for the period.

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(5)   

In this section—

“business journey”, in relation to a vehicle used for the purposes

of a trade, means any journey, or any identifiable part or

proportion of a journey, that is made wholly and exclusively

for the purposes of the trade, and

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“relevant vehicle” has the same meaning as in section 94D.

(6)   

The Treasury may by regulations amend subsection (2) so as to alter

the rates or rate bands.

   

Regulations under this subsection may also make consequential

amendments to subsection (3).

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94G     

Definitions of types of vehicle

(1)   

This section applies for the purposes of sections 94D to 94F (and this

section).

(2)   

“Car” means a mechanically propelled road vehicle which is not—

 
 

Finance (No. 2) Bill
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(a)   

a goods vehicle,

(b)   

a motor cycle,

(c)   

an invalid carriage, or

(d)   

a vehicle of a type not commonly used as a private vehicle

and unsuitable to be so used.

5

(3)   

“Goods vehicle” means a mechanically propelled road vehicle

which—

(a)   

is of a construction primarily suited for the conveyance of

goods or burden of any description, and

(b)   

is not a motor cycle.

10

(4)   

“Motor cycle” has the meaning given by section 185(1) of the Road

Traffic Act 1988.

(5)   

For the purposes of this section “invalid carriage” has the meaning

given by section 185(1) of the Road Traffic Act 1988.

Use of home for business purposes

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94H     

Use of home for business purposes

(1)   

This section applies if, in calculating the profits of a trade of a person

for a period, a deduction (“the standard deduction”) would

otherwise be allowable for the period in respect of the use of the

person’s home for the purposes of the trade.

20

(2)   

The person may, instead of making the standard deduction, make a

deduction for the period under this section.

(3)   

The amount of the deduction allowable for the period is the sum of

the applicable amounts for each month, or part of a month, falling

within the period.

25

(4)   

The applicable amount for a month, or part of a month, is given by

the following Table—

Table

 

Number of hours worked

Applicable amount

 
 

25 or more

£10.00

 

30

 

51 or more

£18.00

 
 

101 or more

£26.00

 

   

where the “number of hours worked” in a month (or part of a month)

is the number of hours spent wholly and exclusively on work done

by the person, or any employee of the person, in the person’s home

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wholly and exclusively for the purposes of the trade.

(5)   

If the person has more than one home, this section has effect as if

those homes were a single home.

 
 

Finance (No. 2) Bill
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(6)   

The Treasury may by regulations amend subsection (4) so as to alter

the rates or rate bands.

Premises used both as home and business premises

94I     

Premises used both as a home and as business premises

(1)   

This section applies if—

5

(a)   

a person carries on a trade at any premises,

(b)   

the premises are used mainly for the purposes of carrying on

the trade, but are also used by the person as a home,

(c)   

the person incurs expenses in relation to the premises,

(d)   

the expenses are incurred mainly (but not wholly and

10

exclusively) for the purposes of the trade, and

(e)   

in calculating the profits of the trade for a period, a deduction

(“the standard deduction”) would otherwise be allowable for

the period in respect of a part or proportion of the expenses

in accordance with section 34(2).

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(2)   

The person may, instead of making the standard deduction, make a

deduction for the period under this section.

(3)   

The amount of the deduction allowable for the period is the amount

of the expenses less the non-business use amount.

(4)   

The non-business use amount is the sum of the applicable amounts

20

for each month, or part of a month, falling within the period.

(5)   

The applicable amount for a month, or part of a month, is given by

the following Table—

Table

 

Number of relevant

Applicable amount

 

25

 

occupants

  
 

1

£350

 
 

2

£500

 
 

3 or more

£650

 

(6)   

For the purposes of subsection (5) “relevant occupant”, in relation to

30

a month (or part of a month), means an individual who, at any time

during that month (or that part of a month)—

(a)   

occupies the premises as a home, or

(b)   

stays at the premises otherwise than in the course of the

trade.

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(7)   

The Treasury may by regulations amend subsection (5) so as to alter

the rates or rate bands.”

3          

In section 31 (relationship between rules prohibiting and allowing

deductions), in subsection (2), after paragraph (a) insert—

“(aa)   

Chapter 5A,”.

40

 
 

Finance (No. 2) Bill
Schedule 5 — Deductions allowable at a fixed rate

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4          

In Chapter 18 (post-cessation receipts), in section 254 (allowable

deductions), after subsection (2A) (inserted by paragraph 39 of Schedule 4)

insert—

“(2B)   

If—

(a)   

the loss or expense is incurred, or the debit arises, in relation

5

to a vehicle, and

(b)   

immediately before the person permanently ceases to carry

on the trade, section 94D (deduction allowable at fixed rate

for expenditure on vehicles) applies in relation to the vehicle,

   

assume for the purposes of subsection (2) that that section applies in

10

relation to the vehicle.”

5     (1)  

Part 2 of CAA 2001 (plant and machinery allowances) is amended as follows.

      (2)  

In Chapter 3 (qualifying expenditure), after section 38 insert—

“38ZA   

Vehicles for which deductions allowed at fixed rate under Part 2 of

ITTOIA 2005

15

   

Expenditure is not qualifying expenditure if—

(a)   

it is incurred in respect of a vehicle in a period, and

(b)   

a deduction is made for the period in respect of the

expenditure under section 94D of ITTOIA 2005 (deduction

allowable at fixed rate for expenditure on vehicles).”

20

      (3)  

In Chapter 5 (allowances and charges), in section 59 (unrelieved qualifying

expenditure), at the end insert—

“(8)   

Subsection (9) applies if—

(a)   

a person carrying on a trade, profession or vocation incurs

expenditure in relation to a vehicle,

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(b)   

at the end of the basis period for a tax year, the person has

unrelieved qualifying expenditure incurred in relation to the

vehicle to carry forward from the chargeable period ending

with that basis period (“the relevant chargeable period”),

(c)   

in calculating the profits of a trade, profession or vocation of

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a person for the following tax year, a deduction is made

under section 94D of ITTOIA 2005 in respect of expenditure

incurred in relation to the vehicle, and

(d)   

the person does not enter the cash basis for that tax year.

(9)   

None of the unrelieved qualifying expenditure incurred in relation

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to the vehicle may be carried forward as unrelieved qualifying

expenditure from the relevant chargeable period.

(10)   

Where a person has unrelieved qualifying expenditure to carry

forward from a chargeable period that is not expenditure allocated to

a single asset pool, the amount of the unrelieved qualifying

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expenditure incurred in relation to the vehicle is to be determined on

such basis as is just and reasonable in all the circumstances.”

6          

The amendments made by this Schedule have effect for the tax year 2013-14

and subsequent tax years.

 
 

 
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Revised 28 March 2013