Company Car Tax: Writing down allowance

Since April 2009 new rules designed to incentivise lower CO2 company cars were introduced that have a direct impact on companies’ bottom lines.

Outright purchase fleets running cars with CO2 emissions higher than 160g/km will gain a writing down allowance of 10 per cent of the values of those cars.

As the car reduces in value over time, the amount companies are able to claim back falls. However, vehicles with CO2 emissions between 111g/km and 160g/km are given double the allowance at 20 per cent, allowing companies to reclaim the cost of those vehicles more quickly.

Any car with CO2 emissions up to 110g/km give companies running them a 100 per cent writing down allowance in the first year. Thereafter it switches to 20 per cent. For companies that lease their cars, a similar system will apply.

A company will be able to offset 100% of the qualifying part of the lease against profits if the vehicle emits 160g/km or less. It will only be able to offset 85% (as there is a 15% disallowance) if the vehicle emissions are any higher.

New Accountancy Rules

Businesses will be affected by new accountancy rules for leasing if proposals in a discussion paper by the International Accountancy Standards Board (IASB) are adopted. For further information on the IASB proposals click here (link to main story in ‘funding and leasing’ section saved as ‘new accountancy rules proposed’)

Tax changes and funding your fleet

The Government is using tax as a means of encouraging the use of ‘cleaner cars’ by aligning tax bands with a vehicle’s CO2 emissions. These thresholds have reduced on a regular basis since their introduction and can have a substantial affect on how a fleet is funded.
For all the key considerations when choosing your method of vehicle acquisition (link to main story in ‘Funding and Leasing’ section saved as ‘tax changes and fleet funding’)

Click here to download 'Fleet Companies and Refunds of VED' by the Department of Transport