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Tuesday 21 April 2009

Dains, are advising business owners of new rules in relation to company cars.

Following November’s Pre-Budget Report, HM Revenue and Customs (HMRC) have issued draft legislation and guidance on the intended changes to tax relief, also known as capital allowances, on business cars which take effect in April 2009.

For expenditure incurred before 6 April 2009 (1 April 2009 for companies) the following tax reliefs are available:
• The immediate 100 per cent write off is available for cars with CO² emissions up to 110gm/km.
• A write off of 20 per cent per annum, on a reducing balance basis, is available for cars costing less than £12,000.
• For cars costing more than £12,000 the write off is restricted to the lower of 20 per cent per annum on a reducing balance basis, and £3,000.

The new rules apply to expenditure incurred on or after 6 April 2009 (1 April 2009 for companies). The immediate 100 per cent write-off for expenditure on cars with CO² emissions up to 110gm/km remains in place.

Andy McQuillan, Tax Partner at Dains said “The annual rate of write-down allowances for expenditure on other cars will be determined by the individual car’s CO² emissions in each case. The new rules state that expenditure on cars with CO² emissions that do not exceed 160gm/km will be pooled in the main 20 per cent pool. Those which do exceed 160gm/km will be pooled in the 10 per cent pool”.

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