In last year’s Budget, the Chancellor announced that the 100% First Year Allowance would be extended until 2015 for cars emitting 95g/km CO₂. The Chancellor today announced a further three year extension until 2018 for cars emitting 75g/km CO₂ or less.

ACFO said that the news shows that the Chancellor has not listened to calls, particularly from the leasing industry and motor manufacturers for the changes to include leased cars, but said that in confirming that the capital allowance and related lease rental restrictions changes will go ahead as planned, the Chancellor has also given clues as to future emission thresholds at which allowance rates will apply. 

Chairman Julie Jenner said: ‘By announcing that the 100% full year allowance will be extended to 31^st March 2018 with the emissions threshold reduced to 75g/km from April 1, 2015 (95 g/km in 2013/14), it seems certain that the main 18% capital allowance threshold will reduce to 76g/km from 96 g/km in 2013/14.’

She added: ‘While we do not know what the 18% upper emissions threshold will be, it is likely to reduce to perhaps 100g/km or 110g/km (130 g/km in 2013/14). Simultaneously we can expect the upper 8% capital allowance emissions threshold to also tighten to perhaps 101g/km or 111g/km from 131 g/km in 2013/14.

‘Additionally, it is likely that the lease rental restriction emissions threshold, which is linked to the 18% capital allowance rate (130 g/km in 2013/14), will similarly reduce.’

Jenner concluded: ‘ACFO is pleased that the Chancellor’s announcement seems to highlight that rates and thresholds will not change over the next two years giving a certain degree of stability.

‘However, the fact that the Chancellor has indicated his future intentions sends a clear signal to fleet managers to future-proof their company car choice lists in terms of opting for low emission vehicles or face the consequences of higher tax bills.’