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Radical change to 2013 writing down allowances

Improvements to CO2 emissions mean that the government is losing money on writing down allowances. It plans to fix that from April – so you need to act now.
Businessmen at computer

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27 January 2013

Businessmen at comuter
CO2 emissions limits that dictate writing down allowances will be cut from April. To take advantage of the exising limits, you need to act now

THE CO2 emissions limits for company car writing down allowances are set to change radically from April 2013.

The 160g/km CO2 limit for company purchased cars, with a writing down allowance of 18%, is reduced to 130g/km. Currently, cars with CO2 emissions greater than 160g/km qualify for a special writing down pool and are subject to an allowance of only 8% a year. From April 2013, this 8% rate will apply to all purchased company cars over 130g/km.

 

Tell me more about writing down allowances

Cars bought (but not leased or contract hired) by your company with CO2 emissions of less than 160g/km qualify as ‘main pool’ cars. The cost of all such vehicles is added to a single pool which can then be depreciated or written down by 18% per annum on a reducing balance basis.

 

Why has there been a change in the writing down allowances?

This huge drop in CO2 limits has been forced on the government because of the success of car manufacturers in reducing company car CO2 emissions. In turn this has meant a substantial drop in revenue. The government needs more money; and wants to persuade small businesses to purchase even lower CO2 emissions company cars through these fiscal changes.

 

What is the new 100% writing down allowance for cars?

There are radical changes too, for very low emission vehicles which qualify for a first year writing down allowance of 100%. From April 2013, the level at which a vehicle qualifies as a very low emission vehicle reduces from 110g/km to 95g/km. From April 2015 the 100% writing down allowance is removed altogether.

 

The new writing down allowances from April 2013

  • 0-95g/km – 100%
  • 96g/km-130g/km – 18%
  • 131g/km + – 8%

Anything else I should be aware of?

The main impact of the change in writing down allowances will be on cars with emissions between 130g/km and 160g/km. If you order, or commit to buy, the car before 1st April 2013 the 160g/km company car tax allowance limit will apply even if it’s not delivered or paid for. If it’s after 1st April then the new writing down allowance rules apply.

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Matt Morton

Matt Morton

Matt Morton is an automotive content writer for Business Car Manager

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