Capital allowances on cars

Produced by a Tolley Owner-Managed Businesses expert

Owner-Managed Businesses

Guidance

Autumn Budget 2024

Capital allowances on cars

Produced by a Tolley Owner-Managed Businesses expert

Owner-Managed Businesses

Guidance

Autumn Budget 2024

Summary of capital allowances on cars

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

Pool type	Description of car	Rate	Legislation
Main rate pool	New and unused cars with CO2 emissions of 50g/km and below	18%	CAA 2001, s 104AA
Main rate pool	Second-hand cars with CO2 emissions of 50g/km and below or a secondhand electric car	18%	CAA 2001, s 104AA
Special rate pool	New or second-hand cars with CO2 emissions of more than 50g/km	6%	CAA 2001, s 104A
First year allowances (FYAs)	New and unused cars with CO2 emissions of 0g/km , or car is electric	100%	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 car. This includes cars pre-registered to a dealer.

For unincorporated businesses where there is private use of a car, the car must be put into a single asset pool. Writing down allowances

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Capital allowances on cars