Enhanced Tax Reliefs for Vehicles

The emissions of a car purchased by a business can have a big impact on the timing of the tax reliefs that be achieved by Capital Allowances.

Cars with very low C02 emissions together with certain electrically propelled cars attract first year allowances at 100%, meaning a full tax deduction is obtained for the expenditure in the year of purchase. With effect from April 2018 this applies to cars with emissions of up to 50g/km (from April 15 to March 18 this limit was 75g/km). In addition, cars capable of being propelled solely by electrical power external to the vehicle, or by a storage battery not connected to any power while in motion, can also get 100% allowances. This relief is only available for cars purchased new. It is important to be aware that the annual investment allowance (AIA) cannot be used against cars so these reliefs are the only way 100% first year allowances can be obtained for purchasing cars.

In addition 100% first year allowances may also be claimed on Zero emission vehicles that are unused, registered good vehicles that cannot emit CO2 emissions.

It should be noted that currently these reliefs are only available on expenditure up 31 March 2021.

The enhanced tax reliefs are also extended to apply to electric vehicle charging points. The 100% relief is available on the purchase and installation of unused equipment for an electric vehicle charging point solely for the purpose of charging electric vehicles. These reliefs are currently only available until 31 March 2019 for companies and 5th April 2019 for individuals.

The main aim for these initiatives is to encourage businesses to invest in lower emission vehicles to assist with the Government’s environmental policies. At present, there is no guarantee that they will further extend these reliefs beyond the dates above, so the timing of expenditure on vehicles should be considered to obtain maximum reliefs.

For more information contact Lesley Connon (lesley.connon@aab.uk) or your usual AAB Advisor.