Part 2

Trading income
Chapter 4

Trade profits: rules restricting deductions

Car or motor cycle hire

Car or motor cycle hire
48
1
This section applies if, in calculating the profits of a trade, a deduction is allowed for expenses incurred on the hiring of a car or motor cycle—
a
which is not a qualifying hire car or motor cycle (see section 49(2)), and
b
the retail price of which when new exceeds £12,000.
2
The amount of the deduction which would otherwise be allowable is reduced by multiplying the amount by the fraction—
(£ 12,000 + RP)/(2 × RP)
where RP is the retail price of the car or motor cycle when new.
3
Subsection (4) applies if the deduction is reduced as a result of subsection (2) and subsequently—
a
there is a rebate (however described) of the hire charges, or
b
a debt in respect of any of the hire charges is released otherwise than as part of a statutory insolvency arrangement.
4
The amount that, as a result of the rebate or release—
a
is brought into account as a receipt of the trade under section 97 (debts incurred and later released), or
b
is treated as a post-cessation receipt under section 249 (debts released after cessation),
is reduced by multiplying it by the fraction in subsection (2).
5
The power under section 74(4) of CAA 2001 to increase or further increase the sums of money specified in Chapter 8 of Part 2 of CAA 2001 includes the power to increase or further increase the sum of money specified in subsection (1)(b) or (2).