Can you claim Capital Allowances on Cars?

Claiming Capital Allowances on Cars

In summary, the level of capital allowances on cars you can claim, depends on the level of CO2 emissions of the car/cars in question.

Who this relates to:

Businesses incurring expenditure from April 2021 on the acquisition of cars, zero-emission goods vehicles or equipment for gas refuelling stations for use in their business.

Rate of Capital Allowances on Cars

A recent measure extended the period for which the 100% first year (capital) allowances (FYAs) are available for this expenditure from April 2021 to April 2025. In conjunction with this, the measure also reduces the CO2 emission thresholds which are used to determine the available rate of capital allowances on cars used for business. This will also reduce the threshold for the lease rental restriction. These changes also came into effect from April 2021.

The legislation extended the 100% FYAs for low CO2 emission cars, zero-emission goods vehicles and equipment for gas refuelling stations by 4 years from April 2021.

The legislation was introduced to reduce the CO2 emission thresholds from April 2021, which determine the rate of capital allowances available through which the capital expenditure for business cars can be written down. The thresholds will be reduced from 50g/km to 0g/km for the purpose of the FYA for low CO2 emission cars and from 110g/km to 50g/km for the purpose of Writing Down Allowances (WDAs) for business cars.

This will mean that business cars acquired from April 2021 with CO2 emissions of 0g/km will be eligible for the FYA (100%) while those business cars with CO2 emissions not exceeding 50g/km will be eligible for WDAs at the main rate (18%) while such cars with CO2 emissions exceeding 50g/km will be eligible for WDAs at the special rate (6%). The new 50g/km threshold will also apply for determining the lease rental restriction for costs of hiring business cars for more than 45 consecutive days.

How TBAT can help

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

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