Can you claim Capital Allowances on Cars?

Claiming Capital Allowances on Cars

The level of capital allowances on cars you can claim depends on the level of CO2 emissions of the car/cars in question and the year of purchase. For cars purchased from April 2021:

• New and unused electric cars and zero CO2 emission cars qualify for enhanced capital allowances. For these you can use the 100% first year allowance which means you can deduct the full costs from your profit before tax.
• Main rate capital allowances. For these 18% of the purchase price can be deducted from your profits each year. This will be for second hand electric cars and new or second hand cars with CO2 emissions 50g/km or less.
• Special rate allowances. For these 6% of the purchase price can be deducted from your profits each year. This will be for new or second hand cars with Co2 emissions over 50g/km.

 What counts as a car for capital allowances purposes

Capital allowances can be claimed on cars that have been purchased by a company for business use. They can not be claimed on cars purchased by employees.

A car is defined by HMRC as  a type of vehicle that:

• Is suitable for private use (including motorhomes)
• Most people would use privately
• Was not built for transporting goods

The following vehicles are not counted as cars for capital allowance purposes:

• Motorcycles (unless purchased before 2009)
• Lorries, vans and trucks

Allowance that can not be used on cars

Annual investment allowance, super deduction, full expensing and 20% first year allowances can not be used for cars.

How TBAT can help

We support businesses in claiming through the Capital Allowances Scheme. Please contact us for further information.