Car Leasing, VAT & Capital Allowances

The 2 principal changes which will have an effect on leasing costs are actually the increased VAT from 17.5 {2d2f44a84581e7faccb3258644ff0ea0b6a9621a7db020bd2ff986e7f0634d92} to twenty {2d2f44a84581e7faccb3258644ff0ea0b6a9621a7db020bd2ff986e7f0634d92} from 4th January 2011, as well as the shift in Capital Allowances.

First of all, let us think about the VAT issue

When a company is actually leasing a car, it is able to recover fifty {2d2f44a84581e7faccb3258644ff0ea0b6a9621a7db020bd2ff986e7f0634d92} of the VAT on the financial part of the agreement (hundred {2d2f44a84581e7faccb3258644ff0ea0b6a9621a7db020bd2ff986e7f0634d92} on the Maintenance component). The automobile leasing vs purchasing question has only become easier to solve!

Contract Hire continues to be an extremely appealing approach of vehicle acquisition for companies.

Modifications in Capital Allowances can make Car Leasing much more appealing

The shift in Capital Allowances suggests that businesses purchasing automobiles with CO2 pollutants up to 160g/km may just write down the price at eighteen {2d2f44a84581e7faccb3258644ff0ea0b6a9621a7db020bd2ff986e7f0634d92}, instead of twenty {2d2f44a84581e7faccb3258644ff0ea0b6a9621a7db020bd2ff986e7f0634d92} before the Budget. These lessened writing down allowances must make automobile leasing a lot more appealing to companies of all sizes.

You will find a lot of advantages of leasing an automobile for private individuals and businesses. Nevertheless, as a business automobile driver, you’re liable for Company automobile Tax, normally referred to as Benefit In Kind Tax. Thus, the reduced the CO2 of your business automobile, the less business automobile tax you’ll pay.


The long term program is actually to go on to offer incentives to companies to choose’ Green Cars’ that are actually kinder to the ecosystem – the reduced the CO2 emissions, the greater.


Changes in Fuel Tax

Thankfully, the Chancellor didn’t increase the tax on gas, though remember that there continue to be increases scheduled from the prior Budget.


See Also: