Readers’ forum: Could balancing allowance be restricted?

My client who is a salesman bought a car in late April 2022 for use in his business. It cost just over £22 000 and was suitable for his long journeys.

In August 2022 following a bereavement he was sadly obliged to use it as his family’s funeral car. After that he felt he could not keep it and sold it at a loss of just under £8 000.

I understand that high depreciation is not unusual in a Mercedes car of its type but I wonder whether HMRC might take the view that because the sale was prompted by a purely personal motive the balancing allowance should be restricted as arising partly from a non-business motive. I have not been able to find any regulations dealing with such a case.

What do Taxation readers think?

Query 20 179 –...