From the recent budget, the Chancellor has decided to change the capital tax on company cars. In addition to reforming Vehicle Excise Duty, Chancellor Allistair Darling promised that the Government will further promote the take up of cleaner cars through reforms to the taxation of company cars business travel.
The new approach will mean replacing the existing capital allowance treatment for company cars with an emissions based method. This will take effect from April 1, 2009. Expenditure on cars with CO2 emissions above 160g/km will attract 10% Writing Down Allowance (WDA) and expenditure on cars with CO2 emissions of 160g/km or below will attract 20% WDA
Subject to state aid approval, cars leased to those in receipt of certain disability allowances will be placed in the 20% main pool, regardless of their CO2 performance.
The rules which disallow a propotion of car lease rental payments will be reformed in line with the new capital allowances rules. The new disallowance will be 15% of the relevant payments, applied to cars dealt with in the 10% special rate pool - In fact the Government is considering the option of applying the disallowance to the final business user only in a chain of leases.
To find out more about the budget effect on company cars and car leasing visit fleetnews.co.uk
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