The 100% first year allowances (FYA) for low emission vehicles and equipment for gas refuelling stations will be extended from 1 April 2021 to 31 March 2025. The announcement also reduces the qualifying threshold emission vehicles for low from 50g/km to 0g/km. The main rate (18%) threshold has been reduced from 110g/km to 50g/km. Expenditure on vehicles with emissions in excess of 50g/km will now attract special rate writing down allowances (6%). The new 50g/km threshold will also apply for calculating the lease rental restriction for the cost of leasing business cars for more than 45 consecutive days.
Businesses who incur capital expenditure on the provision of business cars, zero-emission goods vehicles and equipment for gas refuelling stations.
The measures will come into effect in April 2021.
The measures are unlikely to have a major impact on the purchasing decisions of most large businesses, but may result in a shift for businesses who invest heavily in fleets of vehicles (for whom the tax impact may be more material) toward investing in lower emission vehicles.