Capital allowances on cars

By Tolley
Corporation_tax_img8

The following Corporation Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Capital allowances on cars
  • Definition and classification of cars
  • Cars bought from 1 April 2018
  • Cars bought from 1 April 2015
  • Cars bought from 1 April 2013
  • Cars bought from 1 April 2009
  • Balancing allowances and charges
  • Low emission cars
  • Electric vehicle charging points

Definition and classification of cars

The definition of a ‘car’ for capital allowance purposes is a mechanically propelled road vehicle except a:

  • motorcycle
  • vehicle constructed in such a way that it is primarily suited for transporting goods of any sort
  • vehicle of a type which is not commonly used as a private vehicle and is not suitable for use as a private vehicle

CAA 2001, s 268A

Lorries, vans, trucks etc are therefore not ‘cars’ for capital allowance purposes and will be treated as plant and machinery.

Cars do not qualify for the annual investment allowance (AIA).

Cars bought from 1 April 2018

The CO2 figure used to define a low emissions car has been amended several times by Treasury order.

For expenditure on or after 1 April 2018, cars with emissions of no more than 50g/km will be eligible for the 100% FYA.

Cars with CO2 emissions over 50g/km but not more than 110g/km will be added to the main pool and written down at 18% per annum.

Finally, cars with CO2 emissions over 110g/km will be written down at 6% (8% before 1 April 2019) on a reducing balance basis in the special rate pool.

Cars bought from 1 April 2015

For expenditure on or after 1 April 2015, cars with emissions of no more than 75g/km will be eligible for the 100% FYA

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