Legislation will be introduced to extend the 100% first year (capital) allowances (FYAs) for low CO2 emission cars, zero-emission goods vehicles and equipment for gas refuelling stations by 4 years from April 2021.
On the back of the Prime Minister, Transport Secretary and Business Secretary announcing the end of the sale of new purely petrol and diesel cars in the UK by 2030, further legislation has been introduced to encourage the use of electric cars. So, what’s changing?
From April 2021, the 100% first FYA will only be available for the purchase of new electric cars, or cars which have zero CO2 emissions. Currently it is available for cars with 50g/km or lower CO2 emissions.
The writing down allowance (WDA) at the main rate (18%) will only be available for cars with CO2 emissions not exceeding 50g/km instead of 110g/km. WDAs at the special rate (6%) will apply to cars with CO2 emissions exceeding 50g/km (currently 110g/km).
Furthermore, HMRC has announced the measure extends the period for which the 100% FYAs are available for this expenditure from April 2021 to April 2025.
These measures will support the Government’s wider policy on climate change to reduce all greenhouse gas emissions from the UK to net zero by 2050 and highlights for business owners another clear tax advantage that electric vehicles bring over petrol and diesel vehicles.
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