Q&A: Tax relief on leased cars

Date Published: 11th February 2013

I was thinking about leasing a car, as my local dealer has a good deal on at the moment. But I was wondering what tax relief I’d get on it- can you talk me through it please?

I assume by “lease” you mean you are in essence renting it? In which case, if the car has emissions under 160g/km, you get tax relief on all of the payments. If the car’s emissions are above 160g/km, then 15% is blocked for tax purposes.

However, please note, under current plans the emissions level will drop from 160g/km to 130g/km on 1st April 2013 for companies or 6th April 2013 for unincorporated businesses. So if you are looking at leasing a vehicle with emissions between 130-160g/km, it might be advisable to take the contract out before April 2013.

Also, please review the invoices carefully, as half of the VAT is often blocked on lease payments- on the assumption that they often have a mixture of business and personal use.

If you would like to discuss your plans before you sign anything, your local TaxAssist Accountant would be happy to help. 

By Jo Nockels Google+ Profile



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