Energy efficient cars

The threat of ever increasing fuel prices is never far from our thoughts. This might serve to focus attention a little more closely on energy efficient cars. Since April 2002, a business purchasing a car with CO2 emissions not exceeding 120 grams per kilometre (gm/km) has been able to claim a 100% capital allowance. In other words the full purchase price can be deducted from business profits in the year of purchase unless the car is for the proprietor of an unincorporated business when the allowance will be restricted to take account of the proportion of private use. Back in 2002 the allowance whilst attractive was not a reality for many since very few cars qualified. However the list has now expanded and you may be pleasantly surprised to find the Audi A2 1.4 TDI on the list, as well as certain models of the Citroen C3, Renault Megane and VW Lupo. Try www.comcar.co.uk for a useful comprehensive list of qualifying vehicles.

A car costing say £14,000 would normally only qualify for a capital allowance in year one of £3,000 (being 25% of £12,000 since £14,000 constitutes an ‘expensive’ car). However the Audi A2 1.4 TDI with emissions of 116gm/km would qualify for an allowance of the full cost of £14,000.