Company Cars and Tax

7. Leasing Company Cars

7.1 All the costs of leasing can be deducted from taxable profits as expenses, unless the car has a retail price of over £12,000.

• A complex formula is used for cars over £12,000. Ask your accountant for advice if you want to lease a higher value car.

7.2 Only 50 per cent of the VAT charged on rentals can be claimed, unless the car is used wholly for business purposes only.

7.3 Capital allowances can only be claimed if there is an option to purchase the car.

• The allowances are limited to £3,000 per year (see 6.1).