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HMRC internal manual

Business Income Manual

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Specific deductions: travel and subsistence: cars - restriction of hiring costs: contents

In certain cases, the deduction for the cost of hiring a car which can be made in calculating the profits of a trade is restricted. A 15% restriction applies to cars with CO2 emissions of more than 160g/km. For hire periods beginning before 1 April 2009 for Corporation Tax purposes and 6 April 2009 for Income Tax purposes a different restriction applied. A graduated restriction applied to cars with a retail price when new of more than £12,000.

These rules do not apply to businesses using the cash basis (see BIM70000 onwards).

Hire period

A hire period begins on the first day on which the car is required to be made available for use under the hire agreement.

The guidance is laid out as follows.

 

BIM47725 Hire periods beginning on or after 1/6 April 2009
   
BIM47730 Hire periods beginning on or after 1/6 April 2009: scope
BIM47740 Hire periods beginning on or after 1/6 April 2009: calculation
BIM47745 Hire periods beginning on or after 1/6 April 2009: carbon dioxide emissions
BIM47750 Hire periods beginning on or after 1/6 April 2009: short-term hiring in and long-term hiring out
BIM47755 Hire periods beginning on or after 1/6 April 2009: linked periods
BIM47760 Hire periods beginning on or after 1/6 April 2009: apportionment
BIM47765 Hire periods beginning on or after 1/6 April 2009: condition B
BIM47770 Hire periods beginning on or after 1/6 April 2009: connected persons
BIM47775 Hire periods beginning on or after 1/6 April 2009: election for old rules
BIM47780 Hire periods beginning before 1/6 April 2009
BIM47785 Hire periods beginning before 1/6 April 2009: calculation

For detailed guidance on wholly and exclusively rules for travel costs, see BIM37600 onwards.

 

Intangible assets regime

If a company incurs car hire costs after 31 March 2002, it is possible that the expenditure may fall within the intangible assets regime, see CIRD12620