The Chancellor of the Exchequer’s decision to lower the lease rental restriction/capital allowance threshold from 160g/km to 130g/km has been heavily criticised by Jaguar Land Rover.

The change, announced in the March Budget, comes into force in April 2013: no Jaguar or Land Rover model falls below the new upper ceiling.

Jaguar Land Rover UK managing director Jeremy Hicks told Fleet News: “I’m not happy about the Government’s changes. We are a heavy investor in the UK employing thousands of people and supporting the economy. A curve ball like that isn’t good.”

Enhancements to the 2.2-litre diesel engine in the Jaguar XF saw emissions fall from 149g/km to 135g/km. However, this car will now sit outside the upper capital allowance threshold, which means companies will only be able to write down 8% against taxable profits instead of 18%.

For those leasing, it means that they will be hit by the lease rental restriction of 15%, which means that only 85%, rather than 100%, of the lease is deductable against taxable corporate profits.

While Hicks believes the impact on XF sales in the fleet sector will be minimal, he said: “We want to have advance knowledge on any changes like this so we can work towards it. This decision is not helpful.”