A claim can be made for capital allowances in respect of any cars or vans which are used in a business but only on the part that relates to business use:

1. Any qualified expenditure incurred on or after 6 April 2009 on cars is allocated to one of the two general plant and machinery pools on the basis of the car’s CO2 emissions.

2. In the event cars are also used for non-business purpose they will be kept in a separate single pool asset pool so that an adjustment can be made for the non-business use.

However, any expenditure incurred from April 2009 onwards the rate of WDA is determined by the car’s CO2 emissions.

As regards expenditure on a car in relation to CO2 emissions the provisions are:


1. for very low emissions based on a lowered CO2 threshold of 110 g/km, the existing 100% first year allowances will continue (for 2013-14 and 2014-15 the figure is 95 g/km);


2. a car with 60 g/km or below is allocated to the main pool and attracts WDA of 20% a year (for 2013-14 and 2014-15 the figure is 130 g/km); or

3. a car with more than 160 g/km is allocated to the special rate pool and attracts WDA of 10% a year (for 2013-14 and 2014-15 the figure is 130 g/km).

In respect of cars held before the commencement date of the new rules note the following:

1. Expenditure on a car that costs less than £12,000, incurred before 6 April 2009, will be pooled in the general pool. The expenditure will remain in the main (20%) pool regardless of the car’s emissions.

2. Under the present rules, if a car costs over £12,000 when purchased, it is kept in a separate pool and the WDA is restricted to £3,000 per year until the figure of cost less allowances previously given (the written down value (WDV)) falls below £12,000. The normal 20% WDA is then available for subsequent years the car is held.

3. This is illustrated in the example below:

Showing WDA David bought a brand new car for business use at a cost of £17,000 in June 2010. His accounting year ended in June 2010 so for the year 2010-11 (year to 30 June 2010) he claimed capital allowances of

£3,000 on the car. The written down value (WDV) carried forward to 2011-12 was £14,000 (i.e., £17,000 less 3,000). Also for the year 2011-12 he claimed £3,000, thereby reducing the WDV carried forward to 2012-13 from £14,000 to £11,000 (£14,000 less 3,000). Since the WDV in 2012-13 is now below £12,000, he can claim 20% WDA on £11,000. This is £2,200.

It should also be noted that:

1. The existing rules for expensive cars apply to any cars purchased before 6 April 2009 for a transitional period of 5 years. Thereafter, any expenditure remaining in a single asset pool (unless there is any non-business use of the car) will be transferred to the main capital allowances pool.

2. For the transitional 5-year period, the rate of WDA will remain at 20%. For cars costing over £12,000, however, WDAs will continue to be capped at £3,000 a year for that period.

3. In the event the car is disposed of prior to the end of the five-year period, a balancing charge or balancing allowance will be taken into account as normal. But if there remains any balance of unrelieved expenditure in the single asset pool after the five-year period, this balance will be added to the main capital allowances pool.

4. The transitional period ended on 31 March 2014 for corporation tax and 5 April 2014 for income tax.

Here’s an example of WDA for a Car:

Brian bought a car for £30,000 on 6 April 2009. His accounting year ended on 6 April so he was able to claim an expensive car WDA capped at £3,000 for the tax years 2009-10 to 2013-14. At that point in time he would have had 5 years’ allowances of £3,000 for each year amounting to £15,000.

Therefore, on 5 April 2014 (at the end of the transitional relief) the remaining £15,000 (i.e., £30,000 less £15,000) would go into the main capital allowances pool.

Low Emissions Cars Capital Allowances

As regards expenditure on a car with CO2 emissions, the provisions are:

(a) for very low emissions based on a lowered CO2 emissions threshold of 110 g/km, the existing 100% first-year allowances will continue (for 2013-14 and 2014-15 the figure will be 95 g/km);

(b) for 160g/km or below, the CA will be allocated to the main pool and will attract WDA of 20% a year (for 2013-14 and 2014-15 the figure will be 130 g/km); or

(c) for more than 160g/km, the CA will be allocated to the special rate pool and will attract WDA of 10% a year (for 2013-14 and 2014-15 the figure is 130 g/km).

For cars held before the commencement date of the new rules:

(a) Expenditure on a car that costs less than £12,000, incurred before 6 April 2009, will be pooled in the general pool. The expenditure will remain in the main (20%) pool regardless of the car’s emissions.

(b) Under the present rules, if a car cost over £12,000 when purchased, it is kept in a separate pool and the WDA is restricted to £3,000 per year until the figure of cost less allowances previously given (the written down value (WDV)) falls below £12,000. The normal 20% WDA is then available for subsequent years the car is held.

(c) This is illustrated in this example:

Example 5: Showing Capital Allowances on a Car

Sean bought a new car for business use at a cost of £17,000 in May 2010. Sean’s accounting year ends in June so in 2010-11 (year to 30 June 2010) he can claim capital allowances of £3,000 on the car.

The written down value (WDV) carried forward to 2011-12 is then £14,000 (£17,000 less 3,000).

For 2011-12, again he can claim £3,000 so that the WDV carried forward to 2012-13 is £11,000 (£14,000 less 3,000). For 2012-13, as the WDV is now below £12,000 he can claim 20% WDA on £11,000 = £2,200

Note the following:

(a) The existing rules for expensive cars apply to any cars purchased before 6 April 2009 for a transitional period of 5 years. Thereafter, any expenditure remaining in a single asset pool (unless there is any non-business use of the car) will be transferred to the main capital allowances pool.

(b) For the transitional 5-year period, the rate of WDA remained at 20%. For cars costing over £12,000, however, WDAs will continue to be capped at £3,000 a year for that period.

(c) In the event the car is disposed of prior to the end of the five-year period, a balancing charge or balancing allowance will be taken into account as normal. But if there remains any balance of unrelieved expenditure in the single asset pool after the five-year period, this balance will be added to the main capital allowances pool.

(d) The transitional period ended on 5 April 2014.

Example 6: Showing WDA on an Expensive Car Harry bought a car for £30,000 on 6 April 2009. His accounting year ends on 5 April so he will be able to claim an expensive car WDA, which is capped at £3,000 for the tax years 2009-10 to 2013-14. At that point in time, he will have had 5 years allowances of £3,000 amounting to £15,000.

Therefore, on 5 April 2014 (at the end of transitional relief), the remaining £15,000 (£30,000 less £15,000) was placed in the main capital allowances pool.