Budget 2002: Capital allowances for low emission cars and energy-saving technologies

All businesses can claim 100% enhanced capital allowances (first-year allowances) on expenditure incurred on or after 17 April 2002 until 31 March 2008 on the purchase of:

- new low-emission cars for use in their business or by their employees.
- equipment for refuelling vehicles with natural gas or hydrogen fuel.

Expenditure incurred on a new car can qualify for 100% enhanced capital allowances if it is registered on or after 17 April 2002 and either:

- emits not more than 120gm/km CO2 or
- it is electrically propelled.

The CO2 emissions figure comes from the car's EC certificate of conformity or UK approval certificate. The figure can be found on the car's registration document.

Low emission cars are also removed from the special capital allowance rules for cars whose retail price exceeds £12,000, which restricts the amount of capital allowances and lease rentals a business can deduct in computing its profits for tax.

In addition, expenditure incurred on the following assets acquired for leasing can (indefinitely) qualify for 100% enhanced capital allowances:

- low emission cars
- natural gas/hydrogen refuelling equipment
- energy-saving equipment within the scheme introduced in last year's Budget.
This document is for general guidance and research purposes only, and does not purport to give professional advice. Please check the date at the top of the article; the Workplace Law Network retains historic articles for general research.