The figure of 160g/km CO2 is key to keeping costs down
Many companies may not be aware that there are some significant changes happening in April, to the way fleet cars are going to be taxed.
The whole tax system around fleet cars is changing with tax incentives for running low emission fleet cars. The new rules are designed to incentivise cars that emit CO2 of 160g/km or less by allowing companies to claim a much larger amount of capital allowances (if owned) or rental allowances (if contract hired or leased).
The BVRLA has laid out a brief guide to the new tax changes on their website however the major points are as follows.
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Old – Owning
Cars up to £12,000 capital cost are currently written down at 25% p.a. on a reducing balance basis in a pool. |
Old – Owning
Cars that cost more than £12,000 are written down at 20% p.a. up to a maximum of £3000 pa. Individual balancing charge or allowance is allowed on disposal. |
Old - Contract hire/leasing
For cars that cost more than £12,000 part of the finance element is disallowed against lessee’s business expenses. Disallowance increases as the car costs more.
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New rules
Cars emitting 111g/m to 160g/mn are written down at 20% p.a in general pool. No balancing allowance.
Cars emitting up to 110g/km can have their cost fully written off against their taxable profits in the first year. |
New rules
Cars emitting more than 160g/km are now written down at 10% in a new special pool on a reducing balance basis. No balancing allowance. |
New rules
Cars emitting up to 160g/km the disallowance is now removed. If a cars emits more than 160g/km then the disallowance applied is 15% irrespective of how much the car costs. |
So whether you own your own vehicles or contract hire lease them the figure of 160g/km is the one to remember. John Lewis, chairman of the BVRLA, said in Fleet News recently ” I think fleet managers should be careful about those cars falling close to the 160g/km and 110g/km tipping points”.
Mr Lewis went onto to say ” Some extras – maybe different tyres or automatic transmission – will affect the car’s emissions, possibly putting it over the threshold”.
The BVRLA estimates that circa 40% of all leased cars currently emit more than 160g/km and all small businesses and fleet managers are advised to review the cars they buy or lease, based on CO2 emissions.
Contract Hire rates for cars with a CO2 figure of greater than 160g/km will also have to rise as leasing companies reflect these changes on their own balance sheets.
The figure of 160g/km is the one to remember.
More information about the new changes are available off the BVRLA website.
Editorial contribution for this article came from Ralph Morton