- The expenditure on all business cars is now treated in three ways, depending on the CO2 emissions of each vehicle. Diesel and petrol engine vehicles will be treated the same way. From 2018:
- Companies purchasing cars with emissions of 50g/km or below are able to write down the full cost of these vehicles against their taxable profits in the first year of ownership
- Companies purchasing cars with emissions between 51g/km and 110g/km must allocate the expenditure to the general plant and machinery pool - where they will be able to write down 18% of the cost of these vehicles against their taxable profits each year, on a reducing balance basis
- Companies purchasing cars with emissions of 111g/km and above must allocate the expenditure to a 'special rate' plant and machinery pool - where they will be able to write down only 8% of the cost of these vehicles against their taxable profits each year, on a reducing balance basis
- The percentage of leasing and contract hire payments that are allowable against a companies profits have improved considerably since the changes introduced in April 2009.
- Quite simply for cars with CO2 emissions of 110g/km or less 100% of the rentals are allowable
- For cars with CO2 emissions greater than 110g/km, 85% of the rentals can be deducted from a companies taxable profit.
- "From a purely financial standpoint it looks as if leasing could become the dominant method of funding for most cars" Dan Rees, Business Car Consultant, Deloitte & Touche