You are correct, the rules for capital allowance on cars have changed for companies with effect from 1 April 2009, and income tax businesses from 6 April 2009. The rate of capital allowances are now determined by the Co2 emissions of the vehicle, irrespective of the cost, and will apply to any vehicle that you purchase after these dates.
Cars with emissions of no more than 160 g/km will attract writing down allowances of 20 per cent per annum, irrespective of the cost of the car. Cars with emissions of more than this amount will be added to a “special rate pool”, thus attracting a writing down allowance of 10 per cent per annum.
There is an increased rate of 100% First Year Allowances available on electric cars or cars with C02 emissions of not more than 110g/km. The other conditions to qualify for this increased rate are that the car is "unused and not second hand" and is first registered on or after 1 April 2008 and the expenditure is incurred between 1 April 2008 and 31 March 2013.
If the vehicle is leased, or hired to members of the public, there are further issues you need to be aware of, so we would recommend that you speak with your local TaxAssist accountant before making your purchase.
By Jo Nockels
Disclaimer: Advice shared in this blog is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this forum, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.