Claim capital allowances

5. Business cars

You can claim capital allowances on cars you buy and use in your business. This means you can deduct part of the value from your profits before you pay tax.

Use writing down allowances to work out what you can claim - cars don’t qualify for annual investment allowance (AIA).

Sole traders and partners

If you’re a sole trader or a partner you can claim simplified mileage expenses on business vehicles instead - as long as you haven’t already claimed for them in another way.

Employees

If you’re an employee you can’t claim capital allowances for cars, motorbikes and bicycles you use for work, but you may be able to claim for business mileage and fuel costs.

What counts as a car

For capital allowances a car is a type of vehicle that:

  • is suitable for private use - this includes motorhomes
  • most people use privately
  • wasn’t built for transporting goods

What doesn’t count

Because they don’t count as cars you can claim AIA on:

  • motorcycles - apart from those bought before 6 April 2009
  • lorries, vans and trucks

Rates for cars

The rate you can claim depends on the CO2 emissions of your car and the date you bought it.

The main and special rates apply from 1 April for limited companies, and 6 April for sole traders and partners. The first year allowances rate applies from 1 April for all businesses.

Cars bought from April 2015

Description of car What you can claim
New and unused, CO2 emissions are 75g/km or less (or car is electric) First year allowances
New and unused, CO2 emissions are between 75g/km and 130g/km Main rate allowances
Second hand, CO2 emissions are 130g/km or less (or car is electric) Main rate allowances
New or second hand, CO2 emissions are above 130g/km Special rate allowances

Cars bought between April 2013 and April 2015

Description of car What you can claim
New and unused, CO2 emissions are 95g/km or less (or car is electric) First year allowances
New and unused, CO2 emissions are between 95g/km and 130g/km Main rate allowances
Second hand, CO2 emissions are 130g/km or less (or car is electric) Main rate allowances
New or second hand, CO2 emissions are above 130g/km Special rate allowances

Cars bought between April 2009 and April 2013

Description of car What you can claim
New and unused, CO2 emissions are 110g/km or less (or car is electric) First year allowances
New and unused, CO2 emissions are between 110g/km and 160g/km Main rate allowances
Second hand, CO2 emissions are 160g/km or less (or car is electric) Main rate allowances
New or second hand, CO2 emissions above 160g/km Special rate allowances

Move the balance of any cars bought before April 2009 to your main rate allowances pool.

If your car doesn’t have an emissions figure use the special rate - use the main rate if it was registered before 1 March 2001.

Using cars outside your business

If you’re a sole trader or partner and you also use your car outside your business, calculate how much you can claim based on the amount of business use.

If your business provides a car for an employee or director you can claim capital allowances on the full cost. You may need to report it as a benefit if they use it personally.