Leasing a business car rather than purchasing what is inevitably a fast-depreciating asset in today’s world, has its attractions.
One of these is that if the CO2 emissions of the car do not exceed 160 g/km the whole of the leasing payments are tax deductible (less of course any private use % applying to a sole trader or partner). That magic level is going down sharply to 130 g/km for car leases entered into from April this year, so if you are considering a car change the timing could be all-important. If the CO2 emissions exceed those levels you only get tax relief on a fixed 85% of the lease rentals – not that such a position is really a bad deal if the CO2 emissions are on the high side.
Still on the subject of cars used for business, but this time where you buy for cash or via a loan or HP agreement, rather than lease, there are new timing issues to watch out for. These affect the availability of the 100% tax write-off which is claimable currently where the CO2 emissions do not exceed 110 g/km. That level reduces sharply to 95 g/km from 1 April 2013, with the 100% tax write-off planned to end completely on 31 March 2015. The reduction to 95 g/km eliminates cars such as the Mini Cooper 1.6D and BMW 320d Efficient Dynamics which currently qualify, so careful planning on the timing of the purchase of a low emission car is essential.