In the past, the government tried to "tax company cars out of existence", says Tax Tips & Advice. These days it's a "little more enlightened": the more environmentally friendly the car, the higher the tax relief.
So for cars with carbon emissions above 160g/km, your company can claim capital allowances (CAs). These are equal to just 10% of the cost of the car each year on a reducing balance basis. But if emissions are below this level, you'll get CAs at a rate of 20% (ie, after five years you'll have received tax relief on 61% of the cost).
However, as these rates are falling from 2012, you'd be better off going for a car with very low emissions of just 110g/km. At this level and below, your company can claim 100% of the cost of the car against tax in the year of purchase.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Nor do you have to "tool around" in a Smart car to get the tax break. There are now more than 200 cars on the market, including Audi A3s and BMW 320ds, which fall into the sub-111g/km bracket (see Businesscar.co.uk). So choosing the right low-emissions car could "save your company thousands".
December 2023 NS&I Premium Bond winners - check now to see what you’ve won
If you hold money in NS&I Premium Bonds, you can check from today (2 December) to see if you have won in the December prize draw. Here’s how to check.
By Vaishali Varu Published
OpenAI – corporate drama unleashed
OpenAI, the firm behind ChatGPT, was in uproar as its boss was booted out, briefly snapped up by Microsoft and then brought back again.
By Dr Matthew Partridge Published