Changes on Capital Allowances for company cars

From April onwards there will be changes to the CO2 bands which determine the rate of capital allowances you can claim for the cost of company cars. What are these and are they really worth worrying about?

When it comes to green policies for business, if you don’t follow its rules for disposing of commercial waste you’ll have to face tough penalties. But if you take up green incentives, for example buying low CO2 company cars, you can benefit from tax breaks. However, these are about to become less generous.

From April 1 2013 for companies and April 6 for other businesses, the CO2 emission bands for capital allowances the HMRC’s version of depreciation, will be less generous for company cars as the table below illustrates.

There’s a clear tax planning message for any business looking to buy company cars next year or perhaps into early 2014. Where the CO2 emissions of the cars you have in mind are 160g/km or below, purchase them before April 2013. This will at the very least double the rate of capital allowances you can claim and could speed it up by more than ten times.

For more advice on tax and capital allowances, contact KVS Accountants for advice. We act as personal tax advisors in London, Kensington, Wandsworth, Fulham, Wimbledon, Hammersmith, Richmond and Battersea.

 

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