Capital allowance is available on company cars bought and used by the business. As a rule, you get to 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).
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.
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.
For the purpose of capital allowances and business cars, a car gets defined as a type of vehicle that is:
Some vehicles do not count as cars for capital allowances. But, you should be able to claim annual investment allowance (AIA) on:
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.
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.
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 might need to report the car as a benefit if it gets used 'personally'.
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