Buying Company Cars
Businesses can claim the cost of purchase through capital allowances. This reduces taxable profits and is used by profitable companies with healthy cashflow.
- With conventional cars, all businesses can claim 20 per cent of the written-down cost every year, until the car is no longer in use by the business.
- The maximum that can be written off against tax is £3,000 in one year.
- Businesses can claim 100 per cent first year allowances on low-emission cars and new zero-emissions goods vehicles purchased for business use. Cars must be registered on or after 17 April 2002 and emit less than 110gm/km of CO2 or run on electricity.
- In April 2009 the annual allowance fell to 10 per cent for cars with CO2 emissions above 160gm/km.
- Sole traders who buy cars for business and private use can only claim the business portion of the writing-down allowance.
Tax relief is available in full for two items:
- Maintenance and other running costs.
- Interest paid on a loan to buy the car.Typically, card dealers and leasing firms are the only business able to recover VAT.
A business cannot recover VAT on the purchase of a new car unless it can prove that the car is for business use only.
Enquire Now
