Capital Allowances Act 1990 (repealed)

Chapter III U.K. Expensive Motor Cars

34 Writing-down allowances etc. U.K.

(1) The following provisions of this section shall have effect where capital expenditure exceeding [F1 £12,000] is incurred, or is treated under subsection (4)(b) below or section 81 as incurred, on the provision of a motor car for the purposes of a trade.

(2) It shall be assumed for the purposes of sections 24, 25 and 26—

(a) that the person carrying on the trade (“the actual trade") incurred the expenditure on the provision of the motor car wholly and exclusively for the purposes of a trade carried on by him separately from the actual trade and any other trade he may carry on, and

(b) that without prejudice to section 24(6)(c)(i) to (iii), the separate trade is permanently discontinued when the motor car begins to be used wholly or partly for purposes other than those of the actual trade;

and, subject to subsections (3) to (5) below, the allowance or charge under section 24 which, on these assumptions, would fall to be made for any chargeable period in the case of the separate trade shall be made for that period in the case of the actual trade.

(3) If, on the assumptions in subsection (2) above, a writing-down allowance would fall to be made for any chargeable period in the case of the separate trade, the amount thereof shall be treated as not exceeding—

[F2 (a) except in a case falling within paragraph (b) below, £3,000 or, if the period is a period of less or more than a year, that amount proportionately reduced or, as the case may require, increased,

(b) if, by virtue of section 153, the person carrying on the trade is regarded as having incurred a part only of the expenditure actually incurred on the provision of the motor car, a proportionate part of £3,000 or, if the period is a period of less or more than a year, that part proportionately reduced or, as the case may require, increased.]

(4) Where the disposal value of the motor car falls to be taken into account by reason of an event falling within section 24(6)(c)(i) and that event is such a sale or the performance of such a contract as is referred to in section 75—

(a) the disposal value to be brought into account under sections 24, 25 and 26 in the case of the separate trade shall be an amount equal to the price which the motor car would have fetched on a sale at the same time in the open market or, if less, the capital expenditure incurred, or treated as incurred, on the provision of the motor car by the person disposing of it, and

(b) the person acquiring the motor car shall be treated for the purposes of this Part as having incurred on its provision capital expenditure equal to that disposal value.

(5) If either of the following events occurs in relation to the motor car—

(a) it is used partly for the purposes of the actual trade and partly for other purposes, or

(b) while it is in use for the purposes of the actual trade, there is paid to the person carrying on the trade any sum which is in respect of, or takes account of, part of the wear and tear to it occasioned by that use,

neither section 79 nor section 80 shall apply, but for the chargeable period related to the event and any subsequent period, instead of there being made in the case of the actual trade the allowance or charge which under subsections (1) to (4) above would fall to be made for that period in the case of the separate trade, there shall be made so much of that allowance or charge as, in accordance with section 79 or 80, would be just and reasonable if it were one falling to be made for that period in the case of the notional trade referred to in that section.

Textual Amendments

F1 Words in s. 34(1)(3) substituted (16.7.1992) by Finance (No. 2) Act 1992 (c. 48), s. 71(2)(3)(6).

F2 S. 34(3)(a)(b) substituted (with effect in accordance with s. 211(2) of the amending Act) by Finance Act 1994 (c. 9), s. 213(5)

Modifications etc. (not altering text)

C1 S. 34 modified by 1988 c. 1, Sch. 24 para. 11A(4) (as inserted (1.5.1995) by Finance Act 1995 (c. 4), Sch. 25 para. 6(4))

35 Contributions to expenditure, and hiring of cars. U.K.

(1) Where capital expenditure exceeding [F3 £12,000] is incurred on the provision of a motor car and, by virtue of section 154, writing-down allowances may be made to a person as if a contribution made by him to the expenditure had been expenditure on the provision of a motor car for the purposes of a trade, the amount of the allowance to be made for any chargeable period—

(a) shall be determined as if the contribution had been expenditure on the provision of the motor car for the purposes of a trade carried on by that person separately from any other trade carried on by him, and

(b) shall not exceed an amount bearing to [F3 £3,000] the same proportion as that borne by the contribution to the capital expenditure actually incurred on the provision of the motor car [F4 or, if the chargeable period is a period of less or more than a year, that amount proportionately reduced or, as the case may require, increased].

(2) Where, apart from this subsection, the amount of any expenditure on the hiring of a motor car the retail price of which when new exceeds [F3 £12,000] would be allowed to be deducted in computing for the purposes of tax the profits or gains of any trade, that amount shall be reduced in the proportion which [F3 £12,000], together with one half of the excess, bears to that retail price [F5 ; but this subsection shall have effect subject to subsection (3) below.]

[F6 (2A) Where subsection (2) has operated to reduce any expenditure on the hiring of a motor car, and subsequently either any rebate (by whatever name called) of the rentals is made or any transaction occurs with regard to any rentals that falls within section 94 of the principal Act (debts deducted and subsequently released), then the amount otherwise taxable in respect of the rebate or transaction shall be reduced in the same proportion as the expenditure on hiring was reduced.]

F7 [(3) Subsection (2) above shall not apply where the hiring is under a hire-purchase agreement under which there is an option to purchase exercisable on the payment of a sum equal to not more than 1 per cent. of the retail price of the motor car when new.

(4) In subsection (3) above “hire-purchase agreement” has the meaning given by section 784(6) of the principal Act.]

Textual Amendments

F3 Words in s. 35(1)(2) substituted (16.7.1992) by Finance (No. 2) Act 1992 (c. 48), s. 71(4)(5)(7)(8).

F4 Words in s. 35(1)(b) substituted (with effect in accordance with s. 211(2) of the amending Act) by Finance Act 1994 (c. 9), s. 213(6)

F5 Words in s. 35(2) inserted (for any chargeable period or its basis period ending on or after 25.07.1991) by Finance Act 1991 (c. 31), s. 61(2)(4).

F6 S. 35(2A) inserted (with effect in accordance with Sch. 39 para. 1(4) of the amending Act) by Finance Act 1996 (c. 8), Sch. 39 para. 1(3)

F7 S. 35(3)(4) inserted (for any chargeable period or its basis period ending on or after 25.07.1991) by Finance Act 1991 (c. 31), s. 61(3)(4).

Modifications etc. (not altering text)

C2 S. 35 modified by 1988 c. 1, Sch. 24 para. 11A(4) (as inserted (1.5.1995) by Finance Act 1995 (c. 4), Sch. 25 para. 6(4))

36 Definition of “motor car", etc. U.K.

(1) In this Part “motor car” means any mechanically propelled road vehicle other than—

(a) a vehicle of a construction primarily suited for the conveyance of goods or burden of any description, or

(b) a vehicle of a type not commonly used as a private vehicle and unsuitable to be so used, or

(c) subject to subsections (2) and (4) below, a vehicle provided wholly or mainly for hire to, or for the carriage of, members of the public in the ordinary course of a trade.

(2) Subsection (1)(c) applies to a vehicle only if—

(a) the following conditions are satisfied—

(i) the number of consecutive days for which it is on hire to, or used for the carriage of, the same person will normally be less than 30; and

(ii) the total number of days for which it is on hire to, or used for the carriage of, the same person in any period of 12 months will normally be less than 90; or

(b) it is provided for hire to a person who will himself use it wholly or mainly for hire to, or the carriage of, members of the public in the ordinary course of a trade and in a manner complying with the conditions specified in paragraph (a) above.

(3) For the purposes of subsection (2) above persons who are connected with each other within the meaning of section 839 of the principal Act shall be treated as the same person.

(4) Subsection (2) above does not affect vehicles provided wholly or mainly for the use of persons in receipt of—

(a) [F8 a disability living allowance under the [F9 Social Security Contributions and Benefits Act 1992][F10 or the [F11 Social Security Contributions and Benefits (Northern Ireland) Act 1992]]by virtue of entitlement to the mobility component]. . . ;

(b) a mobility supplement under a scheme made under the M1 Personal Injuries (Emergency Provisions) Act 1939;

(c) a mobility supplement under an Order in Council made under section 12 of the M2 Social Security (Miscellaneous Provisions) Act 1977; or

(d) any payment appearing to the Treasury to be of a similar kind and specified by them by order.

(5) The Treasury may by order increase or further increase the sums of money specified in sections 34 and 35.

Textual Amendments

F8 Words in s. 36(4)(a) substituted (6.4.1992) by Disability Living Allowance and Disability Working Allowance Act 1991 (c. 21), s. 4, Sch. 2, para. 21; S.I. 1991/2617, art. 2(f)

F9 Words in s. 36(4)(a) substituted (1.7.1992) by Social Security (Consequential Provisions) Act 1992 (c. 6), ss. 4, 7(2), Sch. 2 para. 109(b).

F10 Words in s. 36(4)(a) inserted (6.4.1992) by S.I. 1991/2874, art. 6(3)(a); S.R. 1992/94, art. 2.

F11 Words in s. 36(4)(a) substituted (1.7.1992) by Social Security (Consequential Provisions) (Northern Ireland) Act 1992 (c. 9), ss. 4, 7(2), Sch. 2 para. 38(b).

Marginal Citations

M1 1939 c. 82.

M2 1977 c. 5.