Belker speak to your accountant but you could probably claim the accelerated capital allowances on the Avensis if you haven't already then trade up to a Camry and not be massively out of pocket over the course of the next few years.......
Could you explain that a little bit more MFH (as in detail), as I'm ultra thick on tax things.
You have two options for Wear & Tear Capital Allowance, Ken. The accelerated option is only available to full-time taxi drivers but I'm not sure what definition Revenue apply to full-time i.e. whether they look at the proportion of earned income derived from the trade or the actual number of hours you work. In any event, I wouldn't get bogged down on it 'cos either method gives the same end result i.e. the qualifying expenditure is written off against income tax.
If you don't elect for the accelerated option you simply claim qualifying expenditure (cost less provision for private use subject to Revenue limits) over 8 years on a straight line basis i.e. 12.5% per annum.
Ir you elect for the accelerated option you claim qualifying expenditure at 40% on a reducing balance basis e.g. if QE is 20,000 you would claim:
8,000 in year one
4,800 in year two
2,880 in year three
etc
In both cases when you dispose of the car you claim a balancing allowance or addback a balancing charge calculated as the written down value minus the sale price e.g. if your car has a written down value of 12,000 and you sell it for 10,000 you'd have a balancing allowance of 2,000... if you sold it for 14,000 you'd have a balancing charge of 2,000. Hence , in cumulative terms, it generally makes little or no difference which basis you choose as the end sum is the same either way, bearing in mind the fact that you can carry any unused allowances forward to offset against profits from the same trade in future periods.
In essence, the reducing balance method is best suited where you replace your car quite frequently e.g. every 3 years. Similarly, the straight line basis is generally the best option if you intend to keep the car for 7 or 8 years...