Business Cars - Tax implications - an update summer 2017

An Update on Taxation Implications on Cars used in a Business

The general rule to follow is if you buy and use low emission or electric cars there are more taxation benefits to be received.

These are both in the form of capital allowances and also in reduced Vehicle Excise Duty.

Electric cars also benefit from reduced VAT on Electric charges.

More details can be found on the government website at


If you are an employee, you cant claim capital allowances, but you might be able to claim for repayment of business mileage and fuel costs

Sole traders and partners

If you are a business owner, you can claim capital allowances, or alternatively you can claim Simplified Mileage expenses up to 45p per mile – for the first 10,000 business miles and 25p per mile for any additional business mileage undertaken – again more details can be found on the government website link above

Remember if you use your car outside your business for private purposes, then you must reduce the amount claimed by the appropriate “private proportion”.

How much can you claim?

This depends on the CO2 emissions of your car, And the date you bought your car.

The details again are on the above government website, but basically the “headline” fact is - if your car emits CO2 of 75kg/km or less, you are entitled to claim 100% First Year Allowances .

Electric Cars or Ultra Low Emission Vehicles (ULEVs)

The government is on a mission to not only stop people using diesel cars, but also to persuade people to move to hybrid cars or, even better, to pure Electric cars, and have introduced a multitude of grants and benefits to people doing this

The details will be covered in a separate blog to be posted shortly

In the meantime a fact sheet can be downloaded from the government website

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