Apr/100
Mechanics Tax Rebates: Don’t believe all you read…
Reading the tax sections of various forums such as MoneySavingExpert and moneysupermarket reveals the amount of bad advice that’s given out on them.
A lot of misconceptions relate to auto technicians and mechanics looking for advice on tax rebates for tools bought for their work.
The advice given often means that they aren’t getting the full amount of tax owed back as it can be a complicated issue if you don’t know what you are doing.
Flat Rate Expense Allowance
This is what is commonly advised that mechanics should claim, as most people – including many accountants – believe that PAYE employees cannot claim capital allowances.
If you follow the flat rate allowance route you will only get back a small amount of money. You can, in fact, claim capital allowances, as explained on the HM Revenue & Customs website (search for EIM36610, EIM50700, EIM36910, help sheet 206).
It is quite complicated, however. Problems arise because the rates of Writing Down Allowance, Small Pools Writing Down Allowance and First Year Allowances differ for every year from 04/05 to 09/10 and HMRCs guidance for older years is not readily available.
You Can Only Claim Going Back Six Years
Another common misconception that means that many mechanics and car technicians don’t think to claim for tools bought before those six years.
You can, in fact, claim as far back as you have receipts for – one company, The Entitlements Agency, has successfully claimed going back to 1984!
With proof of expenditure, items that pre-date 04/05 can be added to the Capital Allowances pool which, subject to the appropriate writing down allowance (WDA or SPWDA), is offset against tax from 04/05 and the balance of the pool carried forward to the next year and so on. Capital allowance rules allow this as long as a Self Assessment return has not been issued for that year.
This can be a complicated process to carry out, especially as HMRC does not readily provide the allowances any further back than the last tax year.
Conclusion
MoneySavingExpert, moneysupermarket and other forums are a highly valuable source of information but any advice you find on them should always be thoroughly checked out before you act on it or it could end up costing you money. Just be careful what you read!
The Entitlements Agency has successfully claimed tools tax rebates on behalf of many mechanics and car technicians. If you’d like them to do the same for you, download a claim form here or contact The Entitlements Agency here and they will send a claim pack out to you.
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