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
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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

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  • 24 Mar 2026 10:40

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