When you buy a company car there are huge differences on what you can claim for capital allowances ranging from 8% to 100% .

For example, if a company purchases a new car for £100,000 and it qualifies for 100% capital allowances then it can claim the full tax deduction against its profits.

So the Taxman may not buy the whole car but they can definitely make a large contribution!

If instead the car only qualified for 8% capital allowances then the tax deduction would only be £8,000 in the first year!!

The rate of Capital allowances depends on their CO2 emissions.

The greener the car the more tax efficient it is.

So a new car with a CO2 emission of £75g/km or less purchased after 1 April 2015 (6 April for unincorporated businesses) qualifies for 100% Capital allowances.

There are some attractive new cars with a low CO2 rating so it is worth shopping around to see what appeals to you.

If this is not an option for you, then why not consider purchasing a car-derived van or combi-van? These are vehicles which have the functionality of van but with the comfort of a car. If the vehicle qualifies as a van then you claim 100% capital allowances and possibly claim all of the VAT back as well.

There are other taxes involved when buying company cars, for example, Benefits in Kind, so it is very important you obtain advice on the tax implications involved.

If you wish to discuss this further then please do not hesitate to contact us or email kevin@kwaccounting.com