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Fleets advised to act before 31 March to exploit tax incentives

By / 6 years ago / Latest News / No Comments

The 100% tax relief available in the year of purchase will reduce to 18% after 31 March 2015 across the Volvo V40 D2 range, warns Volvo Car Business Sales. 

Using First Year Allowances, companies may offset 100% of the cost against their corporation tax liability in the year they buy a new car if the CO2 emissions are 95g/km or less. Sole traders, and partnerships, too, can benefit by writing down as much as 100% of the cost of qualifying cars against their income tax liability.** 

Until 31 March 2015, businesses wishing to exploit this allowance have just a handful of non-plug-in premium family-sized hatchbacks to choose from, including the Volvo V40 D2 R-Design. With a purchase price of £23,295, buyers can benefit now from tax relief of £4,659* when buying this model in the most popular R-Design trim, thanks in part to its low CO2 output of just 88g/km.

To take advantage, savvy buyers must act quickly. From 1 April 2015, tax changes mean only cars emitting 75g/km CO2 or less will be eligible for the 100% first year  allowance, leaving a limited choice of either electric or plug-in hybrid models to choose from; cars emitting 76 to 130 g/km CO2 will only qualify for an annual 18% writing down allowance.

The first-year cash flow advantage a small company gets by buying now is shown below: 

V40 D2 R Design (88g/km)

 

Pre April 2015

Post April 2015

Purchase price

£23,295

£23,295

First year allowance/Writing down allowance

£23,295

£4,193

Corporation tax relief at 20%

£4,659*

£839

Additional tax relief available from first year allowance

£3,820

 

Selwyn Cooper, head of business sales, Volvo Car UK, said: ‘Our advice to businesses considering a new car is to act now.’ Missing out on the 100% tax relief available this year, for cars such as the Volvo V40 D2, could mean foregoing thousands of pounds of working capital that could be re-invested in the business this year. 

Cooper also commented that: ‘Losing this tax benefit could therefore force you into buying a car that won’t give you the same premium experience.'

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