Lease Rental Restriction - Cars

Lease Rental Restriction For Company Cars

Overview

If you are operating a fleet you need to know which expenses can be deducted from income or corporation tax.

Questions you may ask:

  • Are there restrictions on lease rental payments fleet business expenses deductions for tax purposes?
  • What are the restrictions on tax deduction for lease rental payments?
  • Does the date of registration affect the deduction of lease rental payments?

How does it work?

Car lease rentals are normally an allowable expense for your business which can be deducted against your income or corporation tax charge. To incentivise the adoption of less polluting cars, cars with a deemed high Co2 emissions value will have a percentage restriction applied to the finance element of the lease rental per the table below.

Leases Entered Into  CO₂ emissions Allowed Rentals Disallowed rentals
Apr 2009 - Mar 2013 upto 160g/km 100% 0%
Apr 2009 - Mar 2013 over 160g/km 85% 15%
Apr 2013 - Mar 2018 unto 130g/km 100% 0%
Apr 2013 - Mar 2018 over 130g/km 85% 15%
From Apr 2018 unto 110g/km 100% 0%
From Apr 2018 over 110g/km 85% 15%

The above rates apply to contracts entered into during each period until they expire

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.