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 2021 cars with CO2 emissions not exceeding 50g/km the expense is allocated to the General Pool, and will attract WDA at the rate of 18%. From April 2018 to April 2021 the CO2 emission limit was 110g/km, and from April 2013 up to April 2018 the CO2 emission limit was 130g/km.

For expenditure incurred from April 2021 onwards, where the CO2 emissions exceed 50g/km, the expenditure is allocated to the SRP, and WDA are claimable at 6% on the unrestricted cost, on the normal reducing basis. For expenditure incurred between April 2018 and April 2021 the emission limit was 110g/km, and from April 2013 to April 2018 the emissions limit was 130g/km.

Where on the disposal of a car within either the General Pool, or SRP, no balancing adjustment is made and 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.

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.

For leased cars, there is a flat rate restriction of 15% of the lease premiums payable in the accounting period in respect of cars whose emissions exceed 50g/km. This applies where the lease was entered into after April 2021. For leases entered into between April 2018 and April 2021 the restriction applies where the CO2 emissions exceed 110g/ km; and 130g/km for leases entered into between April 2013 and April 2018. A further adjustment for private use may also be required.

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