Further details have been provided on the
changes to the capital allowance treatment
of cars. The changes will have effect
from 1 April 2009 for corporation tax
purposes and 6 April 2009 for income tax.
The special rules that restrict the amount
of capital allowances for cars costing
more than £12,000 will be abolished.
- Expenditure on cars with CO2
emissions of 160gm/km or below will be
allocated to the plant and machinery
‘pool’ (ie will obtain 20% writing down
allowances (WDA)).
- Expenditure on cars with CO2
emissions above 160gm/km will be
allocated to the ‘special rate pool’ (ie
will obtain 10% WDA).
- Cars that have an element of
non-business use will continue to be
dealt with in a single asset pool to
enable the private use adjustment to be
made, but for expenditure incurred from
April 2009 onwards the rate of WDA will
be determined by the car’s CO2
emissions.
Expenditure incurred before April 2009
will, in general, continue to be subject
to the existing ‘expensive’ car rules for
a transitional period of around five
years. Any expenditure remaining in a
single asset pool (unless there is any
non-business use of the car) will be
transferred to the main capital allowances
pool.
Please do get in touch if you would
like more information on how these changes
will affect you.
Internet link:
HMRC and cars
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