When you purchase a car the expenditure will qualify for Capital Allowances.  Unlike expenditure on machinery and equipment however, expenditure on cars may not qualify for the 100{af331c3cb52abe27a47f1f5b71fb5068c938efb8d5a4e6cddc7f2780f48bb99c} Annual Investment Allowance. The amount and type of Capital Allowance you will get is dependent upon the CO2 rating of the car.  Those below a very low level, which changes periodically, may rank for 100{af331c3cb52abe27a47f1f5b71fb5068c938efb8d5a4e6cddc7f2780f48bb99c} First Year Allowance.

Where they do not qualify for First Year Allowance then they are eligible for an annual Writing Down Allowance, and again the rate of this allowance is determined by the car’s CO2 rating.  Those with high CO2 levels only get a rate of 8{af331c3cb52abe27a47f1f5b71fb5068c938efb8d5a4e6cddc7f2780f48bb99c} per annum.  Those below a specified level (currently 130g/km) qualify for the higher rate of 18{af331c3cb52abe27a47f1f5b71fb5068c938efb8d5a4e6cddc7f2780f48bb99c}.

The tax rules thus encourage you to go for the more environmentally friendly cars.  Thus the choice of your vehicle matters.

The decision of which vehicle to get, how to finance it, and whether to have it inside or outside your business, is a complex issue.  If you would like to discuss it with us, please do not hesitate to contact us.