New Capital Allowances Makes Gas Guzzlers Less Attractive

Friday, 4. July 2008

We have finally had confirmation from the treasury that the tax changes mentioned in the last budget only apply to new cars. Not that anyone expected it to be otherwise but the statements should never have been so vague in the first place. Cars that are already in use by April 2009 will not be subjected to the new rules so this will no doubt spur on a lot of activity between now and next April as companies look to maintain their current beneficial tax position. This has led to a method known as grandfathering to be introduced whilst the old cars wash through the system expected to last for at least 3 years. It amounts to two capital allowance systems running in tandem from April 2009. This means that pre registered cars that emit more than 160g/km of CO2 will be taxed under the current capital allowance system while similar cars registered after April 2009 will be subject to the new writing down allowance. According to the BVRLA more than 40% of cars currently on lease emit more than 160g/km of CO2. There will clearly be a growing trend towards sub 160g/km as this also helps those with company cars when it comes to their benefit in kind tax. As Ian Tilbrook, MD of ING Car Lease pointed out this will not be the end of the executive company car, it will just work out more expensive so best you get your orders in now for your next gas guzzler cos the next one will be very expensive!