However, certain lease rental restrictions apply, depending on your car’s CO2 exhaust emissions.
- If your car has CO2 emissions of 130g/km or less, 100% of the lease costs can be offset against tax.
- Business cars with emissions of 131g/km or more have a 15% restriction (ie only 85% is claimable).
For sole traders and partnerships, the same restrictions apply minus the private element – eg, if 20% of your motoring is private, then 80% of the business car lease rental can be set against tax if the car has CO2 emissions below 130g/km.
The current system for calculating car lease rental restrictions has been in place since March 2009; it replaced the expensive car leasing disallowance.
The lease rental restriction applies to the lease plus any blocked VAT – the ‘effective rental’.
Lease rental restriction only apply to cars; they do not apply to vans.
- Lease rental allowances will change from April 2018. For details click here.