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Carbon taxbreak

In your review of the Toyota IQ 1.0 litre you state: "they all qualify for 100% first year capital allowance, so if your company buys one for you it can claim the entire cost against one year’s profits. That now only applies to the FIAT 500 diesel, the C1 and the 107 the Aygo, the new Fiesta Econetic, the Ibiza Eco, the Polo Bluemotion, The Honda Insight and anything else under 111g/km CO2." Can you explain what this means in real terms please?

Asked on 21 February 2009 by

Answered by Honest John
If a car emits 110g/km CO2 or less and a company buys it for the use of an employee, it can claim the entire cost as a business expense, so reduces its taxable profit by that amount. For cars emitting more than 110g/km the percentage of the purchase price that can be claimed as a business expense reduces on a sliding scale down to 10% in each tax year.

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