Business Cars Capital Allowances
Capital allowance is claimable on company cars bought and used by the business. As a rule, you can deduct part of the value of business cars from company profits before you pay any tax owed.
COMPANY CARS: You will need to use the writing down allowances when working out what you can claim.
Note: Business cars do not qualify for annual investment allowance (AIA).
Sole Traders and Partnerships
As a sole trader (or partner) it is often easier to can claim 'simplified expenses' for business mileage.
But, you can only use this simpler system if you did not already claim through another version.
Capital Allowances on Cars for Employees
As an employee you will not be able to claim capital allowances for work vehicles. This includes cars, bicycles, and motorbikes when used for work. But, you can claim for business mileage and fuel costs in certain circumstances.
What Counts as a Business Car
For the purpose of capital allowances and business cars, a car gets defined as a type of vehicle that is:
- Considered suitable for private use (can include a motorhome).
- Used 'privately' by most people.
- Not built 'purposefully' for the transportation of goods.
Follow UK Rules for 2019 Updates!
What Does Not Count as a Business Car
Some vehicles do not count as cars for capital allowances. But, you should be able to claim annual investment allowance (AIA) on:
- Motorcycles (excluding those bought before the 6th of April 2009).
- Lorries, trucks, and commercial vehicles (e.g. vans).
Main and Special Rates for Business Cars
The vehicle CO2 emissions and the date you bought the car determine what rate you can claim. The main and special rates apply from the 1st of April for limited companies.
The date changes to the 6th of April for sole traders and partnerships. But, all businesses use the 'first year allowances' rate from the 1st of April.
Business Cars bought from April 2015
- New and unused, CO2 emissions are 75g/km or less (or car is electric): Claim first year allowances.
- New and unused, CO2 emissions are between 75g/km and 130g/km: Claim main rate allowances.
- Second hand, CO2 emissions are 130g/km or less (or car is electric): Claim main rate allowances.
- New or second hand, CO2 emissions are above 130g/km: Claim special rate allowances.
Company Cars bought April 2013 to April 2015
- New and unused, CO2 emissions are 95g/km or less (or car is electric): Claim first year allowances.
- New and unused, CO2 emissions are between 95g/km and 130g/km: Claim main rate allowances.
- Second hand, CO2 emissions are 130g/km or less (or car is electric): Claim main rate allowances.
- New or second hand, CO2 emissions are above 130g/km: Claim special rate allowances.
Company Cars bought April 2009 to April 2013
- New and unused, CO2 emissions are 110g/km or less (or car is electric): Claim first year allowances.
- New and unused, CO2 emissions are between 110g/km and 160g/km: Claim main rate allowances.
- Second hand, CO2 emissions are 160g/km or less (or car is electric): Claim main rate allowances.
- New or second hand, CO2 emissions above 160g/km: Claim special rate allowances.
Note: If you bought cars before April 2009 you should move the balance to your main rate allowances pool. Use the 'special rate' if your car has no emissions figure. Use the main rate for cars registered before the 1st of March 2001.
Using Company Cars Outside of the Business
Sole traders or partners may also use their cars outside the business. You must work out the amount you can claim based on the amount of business use the car gets.
You can claim capital allowances on the full cost if the business provides a car for an employee or a director. But, you may need to report a car used 'personally' if it falls under the rules of expenses and benefits for employers.
ALSO IN THIS SECTION
Claim Capital Allowances: Understand the rules and procedures of claiming capital allowance relief.
What You Can Claim AIA On: A list of plant and machinery and other items that qualify for AIA.
Annual Investment Allowance: Learn how to deduct the full value of an item that qualifies for AIA.
First Year Allowances: Find out which assets qualify and how to deduct the full value before tax.
How to Claim AIA: Working out capital allowances and then claiming it using one of the methods.
Capital Allowances on Company Cars in the United Kingdom