Buying an electric or low emission carSource: HM Revenue & Customs | | 24/10/2017
Businesses can claim a 100% first-year allowance (FYA) on the purchase of certain qualifying Plant and Machinery (P&M). In certain circumstances they can also claim FYA’s on the purchase of low CO2 and electric vehicles. The generous Annual Investment Allowance (AIA) does not apply to cars.
There are FYAs available for purchasing a new electric car, or a new, unused car within the threshold for low CO2 emissions (currently 75 gms/km or less). From April 2018, the emission threshold below which cars are eligible for the FYA will be reduced from 75 gms/km to 50 gms/km.
These FYAs are available through the enhanced capital allowances (ECA) scheme for certain energy-saving technologies. The benefits of purchasing a low emission or electric car can therefore be substantial and are aimed at encouraging businesses to reduce their carbon footprint whilst at the same time accelerating tax deductions.
There is also a new FYA for electric vehicle charging points. Taken together, these measures are likely to see many businesses moving forward with plans to purchase electric vehicles and install electric vehicle recharging equipment over the next few years. Please call if you would like to consider this option so that any tax opportunities can be maximised.