Author: Ralph Morton
Key points from Budget 2012
- 15% lease rental restriction to apply to cars with CO2 emissions exceeding 130g/km from April 2013
Budget 2012 has made changes to all allowances to persuade businesses to buy or lease lower CO2 emission company cars, and company car drivers into lower emission business cars.
As with capital allowances, so the lease restriction on business rentals is changing from April 2013.
Currently all company cars on a business car lease can offset the lease cost against the profit and loss account.
At the moment company cars with CO2 emissions in excess of 160g/km CO2 can only claim 85% of the lease rental. From April 2013, the qualifying band moves down so that cars with CO2 emissions in excess of 130g/km will face a 15% restriction.
“While we are not surprised by the direction of the policy to incentivise lower emissions vehicles, we are surprised by the scale. The combination of significant increases to Company Car Taxation together with reductions in the Writing Down Allowance and Leasing Disallowance main threshold to 130gkm creates a challenge for vehicle manufacturers and fleet managers alike. Businesses should be looking for advice on a tax-optimised small fleet profile,” said David Brennan, managing director of leasing and fleet management company, LeasePlan.
The new disallowance figure is the same figure that is used for writing down allowances on company cars that are purchased, maintaining the alignment between both capital allowances and leasing allowances for company car management purposes.
“The Government estimates the changes along with the amendments to the capital allowance and tax relief rules will lead to an increase in the tax take in excess of £600 million on company cars. This means that businesses should seriously consider the carbon foot print of their fleet in order to control costs,” commented Mike Moore, director at Deloitte’s automotive team.
This current system of leasing allowances replaced the complicated expensive car leasing disallowance in 2009.