New Taxation Rules
New taxation rules came into force in April 2009 that have made Business Contract Hire a more attractive proposition than ever.
Whether a company leases or buys its cars it will be affected by the new rules, although the impact on fleets where all or the majority of their cars are low-emitters, will be minimal. The new capital allowance system is aimed at rewarding fleets running cars that produce Co2 emissions at or under the 160 g/km benchmark. It also penalizes those that run vehicles with emissions over that benchmark. Expenditure on cars above 160 g/km will attract 10% Writing Down Allowance (WDA), and will be grouped into a ‘Special Rate Pool’. Cars of 160 g/km or below will attract the normal 20% WDA, and will be included in the main Plant and Machinery Pool. From April 2012 the WDA will reduce to 18% for cars below 160 g/km, and 8% for cars emitting more than 160 g/km of Co2.
The 100% first year capital allowance remains for cars emitting 110 g/km Co2 or less. When they are sold, the sales proceeds are deducted from the pool and continues to be written down. The previous accounting regime will continue for cars purchased prior to 1st April 2009 for Corporation Tax purposes, or 6th April 2009 for Income Tax purposes, for a maximum of 5 years if not disposed of prior to that. Under these old rules, a balancing allowance (or charge) was obtainable at disposal. The implication was that 100% of the commercial depreciation of the car was recoverable over its life on the fleet.
The impact depends on a number of factors but, for a typical fleet, vehicles purchased after 1st April 2009 for Corporation Tax purposes, or April 2009 for Income Tax purposes and emitting under 160 g/km and over 110 g/km it will take, or average, 10 years to claim 95% of the recoverable capital allowances. For a vehicle over 160 g/km this rises to more than 25 years. This means that outright purchase fleets will suffer more than companies who lease their cars.
Businesses can deduct the full cost of finance rentals from taxable profits if the car emits 160 g/km of Co2 or less. On cars with higher emissions, there is a flat-rate allowance (called the Lease Rental Restriction) of 15% of the finance rental. This has the effect of improving Corporation Tax position of higher prices cars acquired on leases after April 2009, especially those cars that emit less than 161 g/km of Co2.
To discuss your requirements in more detail, or if you have any queries regarding any of this information, please call us now on 01653 604300
Customer Testimonials
“Thank you for yet another efficient delivery. The 2 cars arrived as promised and we are very happy with them. We are very pleased with the service and will continue to use you guys for our future car needs.”
Mr S Dodds
“Our congratulations to contracthireuk.co.uk on reaching this milestone (20 Years Trading). In a very competitive market, carleasinguk.com have remained very cost effective and have managed to retain a personal touch sadly missing in this digital age.”
Mr L Maclachlan
“I wanted to drop you a quick note to say thanks for the prompt and efficient way you have handled the order and delivery of my new car in a short space of time. I am delighted with the car and I hope to have dealings with you again in 3 years time.”
Mr M Wood
“We would like to express our thanks once again for another smooth delivery for our latest fleet vehicle. Everything was expertly handled from start to finish, as usual. Many thanks.”
Mrs T Williams
“We have just taken delivery of our latest edition to our fleet and I can't thank the team at contracthireuk.co.uk enough for the superb service levels that they provided to us once again. It is a refreshing change to have a company look after your fleet in such a well organized manner.”
Mrs S Iqbal
“I just wanted to say thank you for sourcing the right car and finance package for me. The car was delivered a week ago, and I know it wasn't the most straight forward deal to arrange. Suffice to say I am delighted with it; its exactly what I wanted.”
Mr M Bilney
“I wanted to thank you for all of your help. You are very easy to deal with and nothing was too much trouble. Keep the offers coming as we have more cars due early next year.”
Mrs J Maylor
“Many Thanks for your assistance in selecting the correct car after much searching on your behalf. The car is outstanding and the delivery was seamless. All in all, and encouraging experience”
Mr W Henry
“Thank you for all of your hard work in getting this sorted. I have been very impressed with your efficiency and willingness to help, and will have no hesitation in recommending your service to others.”
Mr C Rich
“I would like to take this opportunity to thank you for the smooth and efficient manner in dealing with our new vehicle. I have used a number of companies over the past few years, and to be honest I was very surprised by the level of service we received from yourselves, which from my experience is second to none. Every person I have spoken with have been extremely efficient and a pleasure to deal with.”
Mr M Furness
“I would like to thank contracthireuk.co.uk for their professional advice and committed customer service. Our fleet of company cars is increasing significantly over the next few months, so we will be in touch.”
Mr A Strickland
“I have recently placed my business for a new car through your company. I originally chose contracthireuk.co.uk because you provided me with the most competitive quote, but since then I have been hugely impressed with the outstanding customer care I have received.”
Mr M Wilton
Why contracthireuk.co.uk
are better than the rest
- Trading for over 20 Years
- Dedicated account managers
- Impartial funding advice
- Comprehensive maintenance packages
- Bespoke vehicle sourcing solutions
- Continual support throughout the contract
For all enquiries or further information, please call us now on 01653 604300
