Cars and long funding leases

The definition of a ‘car’ for capital allowances purposes is a mechanically propelled vehicle, except for a vehicle that is:

• •a motorcycle
• •constructed in such a way that it is primarily suited for transporting goods of any sort, or
• •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 allowances and are treated in the same way as ‘standard’ pieces of plant and machinery. Furthermore, vehicles such as hackney carriages, dual control cars for driving schools and emergency vehicles are not considered to be cars which are commonly used as a private vehicle.

For more information on capital allowances for cars, see Simon’s Taxes B3.342 (subscription sensitive).

The capital allowances legislation differentiates between:

• •main rate cars, and
• •‘special rate’ cars

A ‘main rate car’ is a car that is given writing down allowances at 18%. It is added to a single asset pool or the main pool if not. A main rate car will be added to a single asset pool where it has private use or otherwise is partially used for non-qualifying activities.

A car is a main rate car if any of the following applies:

• •the car was