How to Claim 100% Tax Relief - On a BMW!


You must consider the tax implications when planning a vehicle lease or purchase.

For example - Did you know that under capital allowances, you can now claim 100% tax relief on a BMW 3 Series?

There have been significant changes in recent years in the way that capital allowances can be claimed on company cars. The treatment of cars is no longer based on the list price, but on the g/km CO2 emission figure. In addition to this, the allowances that are available have been significantly reduced for cars with higher levBMW Interiorels of emissions.

There are three bands of emissions for purchased cars: below 110, 110 to 160 and above 160.

Cars with emission levels below 110 currently get a 100% First year allowance. With this beneficial tax regime, car manufacturers have produced vehicles below this level including Golf hatchbacks and BMW 3 Series.

Cars with emission levels above 110 up to 160 go into the main pool. They are not eligible for first year allowances, but there is no cap on the cost of these, so for example, a Passat estate with a cost of £17,000 would go into the main pool. The WDA on the main pool is currently 20% and is planned to reduce to 18% from 1 April 2012.

Car with emission levels above 160 go into the special rate pool, which currently has a writing down allowance of 10% which reduces to 8% from 1 April 2012. This has a major effect, as these vehicles are now in a 'pool' of assets and a balancing allowance can only be claimed when the company ceases to trade. This is likely to have the effect of creating a large balance of allowances within this pool since vehicles are normally disposed of for a lot less than the cost.

The way in which leased cars are treated has also changed, with the treatment again being based on the emission figure. The banding for these is split above and below 160 g/km C02. If the emissions figure is 160 or less, the lease costs are allowed in full and if the emissions figure is above 160, a straight line 15% of the lease cost is disallowed. In most instances this results in a significantly lower disallowance than that which would have arisen under the old rules, particularly for higher value cars.

As a result of the above changes in legislation the taxation treatment of leased cars has become a lot more favourable. If you are planning a vehicle purchase, then you must consider the relevant tax treatment.

For more information, please contact Ros Clarke or Tim Adcock on tel: 0151 255 2300 or fill in a quick enquiry form.

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