Capital allowances on cars
Businesses can claim capital allowances for certain capital expenditure. Qualifying expenditure on cars must be allocated to one of two general pools of expenditure. Which pool is appropriate depends on the car’s CO2 emissions.
Currently, expenditure on cars with CO2 emissions over 130g/km driven is dealt with in the special rate pool and will attract a writing down allowance (WDA) of 8% p.a. Expenditure on cars with CO2emissions of up to and including 130g/km driven is dealt with in the main pool and will attract a WDA of 18% p.a. From 1 April 2018 the emissions threshold will be reduced to 110g/km.
Cars with CO2 emissions up to 75g/km currently benefit from 100% first year capital allowances. The threshold for claiming this allowance will also be reduced from 75 g/km to 50 g/km from April 2018. The legislation that will effect this change comes into force on 1 November 2016 for expenditure incurred on or after 1 April 2018. The legislation also extends the period for claiming first year allowances from 31 March 2018 to 31 March 2021.