Tax Tip of the Month
February 2010
Hybrid cars
Gordon Brown is very keen on using the tax system to encourage environmentally friendly behaviour.
One particular beneficiary of this is the motor vehicle that churns out minimal pollution in comparison to others, for example the hybrid electric/petrol car, like the Toyota Prius.
So let’s have a look at the supremely joined up legislation that has been bolted on, in small bits, to the legislation in recent years to promote this no doubt laudable aim:
- First-year allowances of 100% are available to a business which buys cars in the period 2002 to 2013 whose CO2 emissions are less than 110 grams per kilometre.
- If a first-year allowance hasn’t been claimed, a 20% write-down allowance (not 10% as most cars now) is available for the acquisition of cars whose CO2 emissions are less than 160 grams per kilometre.
- If a car is made available to an employee by his employer by reason of his employment, instead of the taxable benefit in kind being based on a range of percentages between 15% and 35% of the list price each year, the benefit is a mere 10% of the list price if the CO2 emissions of the car are less than 120 grams per kilometre.
So there are no fewer than three different definitions of a low CO2 emissions car for three different tax purposes. Isn’t it wonderful to be living in the UK today?
