| The government has introduced new tax rules to | | | | from accounting departments, who now only have to |
| encourage businesses to choose vehicles with lower | | | | worry about whether a vehicle has emissions above |
| CO2 emissions. | | | | or below the threshold to work out their writing down |
| From 1st April 2009, 160g/km became a key CO2 | | | | allowance or lease rental restriction." |
| emissions figure for new cars, replacing the previous | | | | What should you do? |
| £12,000 'Expensive Car' threshold. | | | | Whether you run one vehicle or a thousand, you |
| What impact does this have on the cost of leasing a | | | | should review your business car strategy to ensure |
| business car? | | | | that you take full advantage of the new tax regime. |
| For new cars registered from 1 April 2009, companies | | | | Firstly, you need to review your acquisition method. |
| will be able to offset 100% of their leasing payments | | | | Currently there is a 'tipping point' of around 20,000 |
| against their tax bill if the vehicle is below the 160g/km | | | | Franks, with most tax advisers recommending |
| threshold, irrespective of its capital cost. For leased | | | | companies to buy cars costing more than this figure. |
| cars emitting more than this threshold, they will only be | | | | Under the new system, leasing is expected to be the |
| able to claim 85% of the financial element of the rental. | | | | most tax efficient acquisition method in nearly all cases. |
| The new rules will make it more tax efficient than | | | | Secondly, companies need to review their car policy, |
| before to lease a new company car that emits 160g | | | | examining the whole-life cost of vehicles. For example, |
| km of CO2 or less. | | | | two 30,000 Franks cars may cost the same to lease |
| Jane Ramsey of Vesource Ltd says "The tax | | | | or purchase, but, depending on emissions, could have a |
| changes will also relieve a major administrative burden | | | | dramatically different after-tax cost. |