Capital allowances on cars

Copyright © 2026 LexisNexis
Produced by a Tolley Owner-Managed Businesses expert
Owner-Managed Businesses
Guidance

Capital allowances on cars

Copyright © 2026 LexisNexis
Produced by a Tolley Owner-Managed Businesses expert
Owner-Managed Businesses
Guidance
imgtext

Summary of capital allowances on cars

The current capital allowance rates applicable to cars are as follows:

Pool typeDescription of carRateLegislation
Main rate poolNew and unused cars with CO2 emissions of 50g/km and below14% from 1 April 2026 for corporation tax and 6 April 2026 for income tax (18% prior to these dates)CAA 2001, s 104AA
Second-hand cars with CO2 emissions of 50g/km and below or a second hand electric car
Special rate poolNew or second-hand cars with CO2 emissions of more than 50g/km6%CAA 2001, s 104A
First year allowances (FYAs)New and unused cars with CO2 emissions of 0g/km , or car is electric100%CAA 2001, s 45D

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

A car still qualifies as being unused and not second hand if it has been driven a limited number of miles for the purposes of being delivered, tested or used as a demonstration

Continue reading the full document
To gain access to additional expert tax guidance, workflow tools, generative tax AI, and tax research, register for a free trial of Tolley+™
TAKE A FREE TRIAL NOW
Powered by Tolley+™
  • 24 Mar 2026 10:40

Home/ Tolley Tax Guidance/ Owner-Managed Businesses / Calculating trading profit and loss

Popular Articles

Corporation Tax

Associated companies ― from 1 April 2023

Associated companies ― from 1 April 2023Implications of associated companiesFrom 1 April 2023, the rate of corporation tax that a company is subject to depends on the level of its augmented profits. The rate of tax is based on a comparison of the company’s augmented profits against the corporation

22 Mar 2021 10:21 | Produced by Tolley Read more Read more
Corporation Tax

Carried-forward losses restriction

Carried-forward losses restrictionOverview of the carried-forward loss restrictionAn important restriction in the use of losses carried forward was introduced by Finance (No 2) Act 2017. Subject to a de minimis of £5m (known as the deductions allowance), most carried-forward losses are restricted to

14 Jul 2020 11:09 | Produced by Tolley Read more Read more
Corporation Tax

Double tax relief

Double tax reliefWhen income arises in a foreign country to a UK resident company and that income is taxable in that foreign country, the UK may give the company relief for the foreign tax by crediting the foreign tax against the UK tax charged on that income. This might include withholding tax on

14 Jul 2020 11:31 | Produced by Tolley Read more Read more