Would you like the Tax Man to pay the deposit on your New Car!

Many people when choosing their next car don’t know that if you buy a new car before the end of March 2013 then HMRC could pay the deposit.

If your operating a business and are looking at purchasing a vehicle with a CO2 emission below 110g/km then you will be entitled to write off the cost of the vehicle against your profits for that period. Therefore if you are a basic rate tax payer this will reduce your tax charge by the equivalent of 29% of the value of the car, which is more than the deposit. If you were a higher rate tax payer this could reduce your tax liability by up to 42% of the cost of the vehicle.

You probably also didn’t know that there are over 659 cars that have a CO2 emission below 110g/km. It will surprise you what cars have CO2 emissions below this magic figure, here are just a few examples:

Audi               Some of the A1 and A3’s

BMW              Some of the 1 and 3 Series

Citroen           Some of the C1, C3 and C4’s

Fiat                 Panda’s, 500’s and Punto’s

Ford                Ka’s, Fiesta’s and Focus’s

Honda             Jazz, and Civic’s

Hyundai          I10’s, I20’s and I30’s

Kia                  Picanto’s and Rio’s

Lexus              CT200h’s

Mazda            Some of the 2 and 6 series

Mercedes       Some of A and one of the E Class

Mini                 1.6 One’s and Cooper’s

Nissan            Micra and Note’s

Peugeot         107’s, 207’s, 208’s, 308’S and 508’s

Renault           Clio’s and Megane’s

Seat                Ibiza’s and Leon’s

Skoda             Fabia’s and Octavia

Smart              Fortwo’s

Suzuki Alto’s and Swift

Toyota            Aygo’s and Prius

Vauxhall          Corsa’s and Astra’s

Volkswagen   Polo’s, Golf’s, Jetta’s and Passat

Volvo              C30 and V40’s

So if you are looking for a new car remember that the tax man could pay your deposit. You need to act fast because from April 2013 the CO2 criteria will become even more stringent reducing from 110 g/km to 95g/km.

Think Bike!


Would you consider the use of a motorcycle in your business?

In recent years, the capital allowances available on cars have been increasingly restricted based on the CO2 emissions in order to encourage business owners to consider  more environmentally friendly options when purchasing new vehicles.

Cars purchased as of 6 April 2012 with CO2 emissions between 110g/km and 160g/km would qualify for an 18% annual writing down allowance whilst cars exceeding 160g/km only 8%. (The CO2 emissions of a car can be found on it’s V5 documentation)

At this present time, cars with CO2 emissions below 110g/km are eligible for 100% first year allowances, however there are limited options available with such low CO2 emissions and this generous allowance may not continue into the future.

Prior to April 2009, motorcycles were included under the HMRC definition of a ‘car’ however motorcycles purchased after 6 April 2009 do not fall into this category and therefore offer more scope for capital allowances, with up to 100% of the cost of the motorcycle available for deduction in the financial year it was purchased.

Any allowances available on cars would be subject to a reduction for private use, as would the allowances available on a motorcycle, the main difference being the amount of allowance available to begin with.

For example, for the financial year in which it was purchased, a car costing £10,000 with CO2 emissions of 130g/km would qualify for a writing down allowance of £1,800 (£10,000 @ 18%).

The same scenario where the car has CO2 emissions of 170g/km, the allowance would only be £800 (£10,000 @ 8%).

A motorcycle costing £10,000 however, given that it would not fall under the HMRC definition of a ‘car’, would qualify for a £10,000 writing down allowance in the financial year of purchase under the Annual Investment Allowance Scheme (capped at £25,000 p.a. for the year 6 April 2012 to 5 April 2013).

What about the small print? Obviously you would have to be able to justify that it is reasonable for you to use your motorcycle within the course of your business i.e. it would be highly unlikely that you could class a motorcycle as a suitable method of transport for a plumber who would have to carry tools etc.

Please note: This article is a commentary on general principles and should not be interpreted as advice for your specific situation.

Image courtesy of gualberto107 at FreeDigitalPhotos.net