The results of a long consultation process, the rules for capital allowance on cars were announced in the 2008 budget in March, and this confirmed the proposed changes as follows:
Up until April 2008 cars with emission up to 120g/km CO2 will get 100% first year allowance.
From April 2008 to 31st March 2013 cars up to 110g/km CO2 will get 100% first year allowance, cars from 111g to 160g will attract a 20% writing-down allowance, and those above 160g will only get a 10% WDA. This confirmed that cars in the 111 to 120 g/km CO2 range will fall out of this "very low" bracket from April 2008.
Should you purchase a low emmission car of up to 110g/km, one benefit for the employees who use it is that it will benefit from reduced company car tax from of 10% for a petrol vehicle and 13% for a Diesel.
If you are considering leasing these vehicles, remember that there are rules disallowing a proportion of car lease rental payments for tax purposes, and these have been reformed along the same lines, so please ensure you speak with your local TaxAssist Accountant before deciding on how you will purchase these vehicles.