The government is particularly keen to encourage people to use low-polluting cars, such as the Toyota Prius, says The Schmidt Report.
But it pays to look at the small print when seeking to take advantage of the new tax breaks. There are “no fewer than three different definitions of a low CO2 emissions car for three different tax purposes”. So what are the tax breaks?
First-year allowances of 100% are available to a business that buys cars between 2002 and 2013 whose CO2 emissions are less than 110g/km. If you haven’t claimed this allowance, you could claim a 20% write-down allowance on the vehicle’s cost, providing the cars you have bought have CO2 emissions of less than 160g/km.
Further, there’s a bonus for an employer who lets a member of staff use a car for work. Instead of basing the taxable benefit in kind on a range of percentages between 15% and 35% of the list price each year, the taxable benefit is just 10% of that list price, as long as the CO2 emissions of the car are less than 120g/km.