Capital Allowances for Cars Print

For cars on which there is no requirement to adjust the allowances claimed to reflect private usage (i.e. all company cars, and cars used by employees of sole proprietors, partnerships and LLPs) the initial cost of the car either goes into the General Pool, or into the Special Rate Pool, depending upon the CO2 emissions. For expenditure incurred from April 2013, where the CO2 emissions are up to 130g/km, (160g/km for expenditure incurred before April 2013) the expense is allocated to the General Pool, and will attract WDA at the rate of 18%.

Where the CO2 emissions exceed 130g/km, (160g/km for expenditure incurred before April 2013) the expenditure is allocated to the SRP, and WDA are claimable at 8% on the unrestricted cost, on the normal reducing basis.

Where a private use adjustment is required the car does not go into either the General Pool, or the Special Rate Pool, but into a single asset pool to enable the private use adjustment to be made. On disposal of the car, a balancing adjustment will still be made, which will in general entitle the proprietors of sole-trade businesses and partnerships to balancing allowances.

Where on the disposal of a car no balancing adjustment is made it will take well over 40 years for the cost of a car within the SRP to be exhausted by the current WDA process. By that time, the car will almost certainly have been replaced many times over.

For cars acquired before April 2009 any WDV remaining at April 2014 had to be transferred into the general pool unless there is a private use adjustment, in which case it will remain in its single asset pool.

The rules were also changed for leased cars. For expenditure on leases which commenced prior to April 2009, the old rules continue to apply (i.e. the lease premiums are restricted by the proportion obtained by calculating 50% of the cost of the car in excess of £12,000, divided by the cost of the car). For leases entered into after April 2009 the restriction only applies to cars whose emissions exceed 130g/km, and is a flat rate 15% of the lease premiums payable in the accounting period. For leases entered into before April 2013 the restriction applies to cars whose emissions exceed 160 g/km. A further adjustment for private use may be required.

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