Company Car Schemes

Do you have a fleet of company cars? If so, would it be helpful if we could show you how to claim full tax relief on the capital cost of those cars much earlier?

As a quick reminder, the rule for “medium emission” cars is that the purchase price is added to the plant and machinery pool for calculating capital allowances. A 20% writing down allowance is then applied on a reducing balance basis. This means that they can receive 20% in the first year, 16% in the second year, 12.8% in the third year, and so on. By year ten, they will still not have obtained any tax relief on over 10% of the cost. Even after 20 years, you will still not have been given all of the tax relief.

For “high emission” cars the position is even worse, as the writing down allowance is only 10%.

When the car is sold, there is no “balancing allowance”. The tax allowance continues to be spread indefinitely. In the meantime, you have purchased another car and also only get a reduced allowance on this as well. Over a number of years, with several replacements having taken place, the gap between the amount spent and the amount the company can claim, widens considerably.

So, are you ready to take action and make a massive saving?

Firstly, although you may already be aware of this, if you purchase cars with emissions below 110g/km you can claim a 100% first year deduction. Not only will you benefit from the cash flow, but you can also feel proud that by buying “greener” cars, you are “doing your bit” for the environment, and reducing global warming.

However until better low-emission cars are produced, there is another idea that you have probably not considered which could have a very positive impact on your cash flow.

If you wish to speak to someone  in relation to this scheme, please do not hesitate to contact us. Also, if you are prepared to swap your company car for a company motorbike, the latter benefits from a 100% deduction in one year. Anyone for a Ducati?