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Budget 2012: Changes to capital allowances for company cars

George Osborne has announced changes to the capital allowances regime for business cars to “strengthen the environmental incentive for businesses to purchase fuel-efficient cars”.
From April 2013:

  • The carbon dioxide emissions threshold for the main rate of capital allowances for business cars will be cut from 160g/km to 130g/km.

  • The threshold above which the lease rental restriction will also be cut from 160g/km to 130g/km.

  • The carbon dioxide emissions threshold below which cars are eligible for the first-year allowances (FYAs) will be reduced from 110g/km to 95g/km. Leased business cars will no longer be eligible for the FYA.

  • The 100% FYA for businesses purchasing low emissions cars will be extended for a further two years to 31 March 2015.



Want to know more?

Company Car Tax Rates, HM Revenue & Customs:
www.hmrc.gov.uk/budget2012/tiin-2108.htm

Company cars - guidance for employers, HM Revenue & Customs:
www.hmrc.gov.uk/cars/employer-guidance.htm

Extract from Budget 2012 Report

Page 66
2.107

"Capital allowances: business cars first-year allowances (FYAs) – From April 2013, the government will extend the 100 per cent FYA for businesses purchasing low emissions cars for a further two years to 31 March 2015. The carbon dioxide emissions threshold below which cars are eligible for the FYA will also be reduced from 110 grams/kilometre to 95 grams/kilometre, and leased business cars will no longer be eligible for the FYA. (Finance Bill 2013) (21)"

2.108

"Capital allowances: business cars main rate – From April 2013, the carbon dioxide emissions threshold for the main rate of capital allowances for business cars will reduce from 160 grams/kilometre to 130 grams/kilometre. The threshold above which the lease rental restriction applies will also reduce from 160 grams/kilometre to 130 grams/kilometre. (Finance Bill 2013) (21)"

Page 71
2.153

"Company car tax rates 2014–16 – The appropriate percentage of list price subject to tax will increase by one percentage point for cars emitting more than 75 grams/kilometre of carbon dioxide, to a maximum of 35 per cent in 2014–15, and by two percentage points, to a maximum of 37 per cent in both 2015–16 and 2016–17. (Finance Bill 2012 and future Finance Bill) (20)"

Date 22/03/2012

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