SOLE traders and the self-employed could benefit most from the extended car scrappage scheme.

The government has put further backing behind the successful scheme and extended its terms.

So if you run your own private car and charge the mileage to your business – and fancy £2000 towards a new car – but have delayed any decision, now is the moment to move.

There has been a change to the qualification period: to ensure all 10 year old cars qualify for the scheme, the date by which vehicles must have been registered in the UK is changed to 28 February 2000 (V registration).

However, if you have a van that you fancy changing, the rules have been relaxed: the date has been changed to 28 February 2002 (Y registration or earlier, or new style number plates where the third and fourth digits of the registration number are 51).

Otherwise, the terms of the scrappage scheme remain the same:

Paul Harrison, the head of motor finance at the Finance & Leasing Association (FLA) said the organisation welcomed the extension. “The government is also in talks in Brussels on additional support for the motor finance sector. We need Lord Mandelson to get a good result there, so that demand for new cars can continue to be met in the future when the economy recovers,” added Harrison.

However, reaction wasn’t universally positive. The Environmental Transport Association’s director, Andrew Davis, said: “Car scrapping initiatives are often mistakenly labelled as green because they subsidise the purchase of cars that are usually more fuel-efficient than those they replace.

“But the schemes are by their nature wasteful and routinely fail to take into consideration the amount of energy required to build a vehicle in the first place.”

So far 227,750 orders have been placed through the scheme – from a total original commitment of 300,000. The increased funding enables the scheme to fund a further 100,000 vehicles, bringing total budget to £400 million and covering up to 400,000 vehicles in total. The scheme will last until February 2010. Unless the funds are exhausted earlier.

Further information

Need more information on how to claim business mileage in your private car? Then read Tax: approved business mileage rates (AMAPs).

Further details of the scrappage scheme can be found in our Advice Centre article How to use the scrappage scheme – UPDATED and in our Law & Tax article Details of car scrappage scheme 2009-2010 – UPDATED.

Have your say

Want to express your opinion on the car scrappage scheme? Then visit our community site and vote: Cash for scrap – will you use it?

More comment

Read the Editor’s Blog More money for scrappage scheme.

Government extends ‘bangers for cash’ scheme