Important Tax Changes That You Should Know About

Friday, 13. March 2009

If you are a business you need to be aware of the tax changes coming into force in April. I have been through this before but as we are now nearly there let me refresh your memory:

Cars with CO2 emissions of more than 160g/km will be written down at 10% on a reducing balance basis.
Cars of less than or equal to 160g/km will be written down at 20% on a reducing balance basis.
The £3,000 per annum maximum writing down allowance has been removed and as before there will be a first year allowance of 100% for cars with CO2 emissions of 110g/km or less.
New rules for lease rental restrictions mean cars with CO2 emissions of less than or equal to 160g/km will have no element of their leasing cost disallowed for corporation tax purposes.
Cars with CO2 emissions of more than 160g/km will have a flat 15% of the finance rental element of their leasing cost disallowed.
The percentage of financial rental costs that are disallowed will be capped at 15%.

Industry experts suggest that costs on company cars emitting over 160g/km will increase on average by £30 per month. The new rules only apply to new acquisitions after the start of the new tax year. All existing cars will continue to be taxed under the old system until they are disposed of. If you would like to go into more depth on the subject, major leasing company Lex has prepared a white paper detailing the effects and listing the winners and losers. You can obtain a copy of the white paper by visiting their website www.lex.co.uk By Graham Hill