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.

There’s a different way to work out what you can claim if the car qualifies for the 100% first year allowance - for example, if it’s an electric car or a car with zero CO2 emissions.

Cars do not qualify for annual investment allowance.

Sole traders and partnerships

You can claim simplified mileage expenses on business vehicles instead, if you’re either:

  • a sole trader
  • a partnership that has no company partners

You cannot claim simplified mileage expenses if you’ve already claimed for the vehicles in another way.

Employees

If you’re an employee you cannot 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
  • was not built for transporting goods

What does not count

Because they do not count as cars you can claim annual investment allowance on:

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

Rates for cars

You can claim one of the following:

  • the full value of the car as 100% first year allowances
  • 18% of the car’s value (main rate allowances)
  • 6% of the car’s value (special rate allowances)

Read more about main and special rate allowances pools.

Which rate you can claim depends on when you bought the car and its CO2 emissions.

Check your car’s CO2 emissions.

Main and special rates apply from 1 April for businesses that pay Corporation Tax, and 6 April for businesses that pay Income Tax. The 100% first year allowances rate applies from 1 April for all businesses.

Cars bought from April 2021

Description of car What you can claim
New and unused, CO2 emissions are 0g/km (or car is electric) 100% first year allowances
Second hand electric car Main rate allowances
New or second hand, CO2 emissions are 50g/km or less Main rate allowances
New or second hand, CO2 emissions are over 50g/km Special rate allowances

Cars bought between April 2018 and April 2021

Description of car What you can claim
New and unused, CO2 emissions are 50g/km or less (or car is electric) 100% first year allowances
Second hand electric car Main rate allowances
New or second hand, CO2 emissions are 110g/km or less Main rate allowances
New or second hand, CO2 emissions are over 110g/km Special rate allowances

Cars bought between April 2015 and April 2018

Description of car What you can claim
New and unused, CO2 emissions are 75g/km or less (or car is electric) 100% first year allowances
Second hand electric car Main rate allowances
New or second hand, CO2 emissions are 130g/km or less Main rate allowances
New or second hand, CO2 emissions are over 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) 100% first year allowances
Second hand electric car Main rate allowances
New or second hand, CO2 emissions are 130g/km or less Main rate allowances
New or second hand, CO2 emissions are over 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) 100% first year allowances
New or second hand, CO2 emissions are 160g/km or less Main rate allowances
Second hand electric car Main rate allowances
New or second hand, CO2 emissions are over 160g/km Special rate allowances

Cars bought before April 2009

Move the balance of any cars bought before April 2009 to your main rate allowances pool when you work out how much you can claim.

If your car does not 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 partnership and you also use your car outside your business, work out what 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 tell HMRC the car is a company benefit if they use it personally.