From April 2009, the rules surrounding tax relief has become more closely aligned to the CO2 emissions of the vehicle, rather than vehicle price. These changes aim to further encourage car manufacturers and business purchasers to reduce the impact of business travel on the environment. Manufacturers have come to the party as well by introducing model lines and special editions where the main aim is to reduce Co2 Emissions and Increase MPG, ie. by making the cars less harmful to the environment and also cutting the time & money spent at the fuel pumps!
The new capital allowances system will largely revolve around a three tiered structure, based on CO2 emission limits:
CO2 Emmission output of vehicle
| 110g/km CO2 or less | 111 to 160g/km CO2 | 161g/km CO2 or greater | |
|---|---|---|---|
| Leased Cars Tax Change | 100% of the lease rental can be offset against tax & profits for the duration of the contract | 100% of the lease rental can be offset against tax & profits for the duration of the contract | Due to the Co2 giving a 15% lease rental restriction, 85% of the lease rental can be offset against tax and profits for the duration of the contract |
| Leased Vans Tax Change | 100% of the lease rental can be offset against tax & profits for the duration of the contract | 100% of the lease rental can be offset against tax & profits for the duration of the contract | 100% of the lease rental can be offset against tax & profits for the duration of the contract |
| Leased Vehicle Effect | Together with the ability to offset all of the rental gives the most tax efficient Whole Life Cost (WLC) | Likely to be the most tax efficient option for lease | Benefits of leasing diluted by Minimum WDA available and the restriction on leased rentals. But often more financially effective than purchasing |
The Green Badges:
