Capital Allowances and Capital Allowance For Car Rules

Capital Allowances and Capital Allowance For Car Rules

Cars Vans

If you are operating company vehicles dependent on the funding method you use, you may be able to obtain tax relief on your vehicle purchase.

Questions you may ask:

  • Can I reclaim my car purchase cost via a capital allowance for car?
  • What are the restrictions on obtaining tax relief on purchasing vehicles for my business.

How does it work?

Capital Allowances For Cars

Capital Allowances for cars is dependant upon the CO2 of the car and the period in which the car was purchased.

1 April to 31 March

First Yes Allowance

Main Pool

Special Pool

CO₂ emissions

Writing Down Allowance (WDA)

CO₂ emissions

Writing Down Allowance (WDA)

CO₂ emissions

Writing Down Allowance (WDA)

2018 to 2021

50g/km or below

100%

51 - 110g/km

18%

111g/km or greater

8%

(6% post 1 April 19)

2015 to 2018

75g/km or below

100%

76 - 130g/km

18%

130g/km or greater

8%

2013 to 2015

95g/km or below

100%

96 - 130g/km

18%

130g/km or greater

8%

2012 to 2013

110g/km or below

100%

111 - 160g/km

18%

160g/km or greater

8%

2009 to 2012

110g/km or below

100%

111 - 160g/km

20%

160g/km or greater

10%

From April 2009 balancing allowances or charges on the disposal of vehicles were abolished meaning that 100% recovery of tax relief on depreciation over the life of the car on the fleet is no longer available.

Capital Allowance for car which are available via the main or special pools are calculated on a reducing balance basis ( i.e. the applicable percentage multiplied by the pool balance), at the point of disposing of the car a final balancing allowance or charge is no longer available. This now means that 100% tax relief on a car relating to its depreciation is now not achievable.

Leasing companies have not been eligible to claim FYAs on cars purchased to lease to clients since April 2013.

Businesses acquiring new and unused electric charge points are able to claim a 100% first year allowance (FYA). This provision is currently confirmed up to 31 March 2023 for companies, and 5 April 2023 for businesses subject to income tax.

Capital Allowances For Vans

Period

First Yes Allowance *

Main Pool (Plant and Machinery) **

CO₂ emissions

Writing Down Allowance (WDA)

CO₂ emissions

Writing Down Allowance (WDA)

up to 31 March 2021

0g/km

100%

1g/km or greater

18%

* Subject to the business not claiming the Plug-In Van Grant offered by the government

** Subject to the business not claiming the Annual Investment Allowance

Annual Investment Allowance (AIA)

The Annual Investment Allowance (AIA) is a 100% writing-down allowance, whose limit is £200,000. This can be used for purchase based funding types including Contract Purchase for vans but not cars.

The majority of businesses should be able to claim the AIA on expenditure on plant and machinery and purchases relating to commercial vehicles should qualify, however it should be noted that cars are an exception and cannot be included.

This can be used for purchase based funding types including Contract Purchase for vans.

Electric Charge Points (new and used purchases)

Businesses purchasing new and unused electric charge-points will be eligible to claim a 100% first year allowance (FYA). Available until 31 March 2019 for companies, and 5 April 2019 for businesses subject to income tax. 

The information provided is based on existing and proposed legislation as at November 2017 (2017 Autumn Budget). Whilst every effort has been made to ensure that information given is accurate and not misleading, this information is intended to provide a quick reference to the current tax regulations relating to company vehicles and how they impact employers and employees. The content has been provided for informational purposes only and should not be relied on as a substitute for professional advice. No responsibility can be accepted by LetsTalkFleet Ltd for any loss or liability occasioned by any person acting on or refraining from action as a result of viewing this information.