Budget 2012: Changes to capital allowances for company cars

Chancellor George Osborne has announced changes affecting the capital allowances that can be claimed on company cars in the Budget report 2012.

From April 2013, the carbon dioxide emissions threshold for the main rate of capital allowances for business cars will be reduced from 160g per km to 130g per km from April 2013. The threshold above which the lease rental restriction applies will also be cut from 160g per km to 130g per km.

Alastair Kendrick, tax director at MacIntyre Hudson, said this change will increase the cost of leasing cars. “The capital allowance relief on cars will be adjusted so cars with a CO2 emission above 130 grams (currently 160grams) will get a 15% restriction. This will increase the cost of leasing cars,” he said.

From April 2013, the government will also extend the 100% first year allowance for businesses purchasing low-emissions cars for a further two years to 31 March 2015. The carbon dioxide emissions threshold below which cars are eligible for the first year allowance will also be reduced from 110g per km to 95g per km, and leased business cars will no longer be eligible for the first year allowance.

The chancellor also confirmed there will be no further changes to fuel duty.

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