UK Government Contemplating More Incentives for Cleaner Cars

If you prefer a cleaner car to a traditional vehicle, you not only contribute towards mitigating Global Warming but, ease your balance sheet substantially as well. The UK Government is now directing millions of pounds towards firms with vehicles that hit key CO2 targets. So if you pollute more, you end up paying more.

As per the new capital allowance rules, From April 1, 2009, expenditure on cars emitting more than 160g/km CO2 will translate into 10% Writing Down Allowance (WDA) whilst lesser emission will attract 20% WDA. Leased cars breaching the 160g/km level of CO2 will have 15% of the relevant payments disallowed whilst there is no disallowance if the vehicle emits less than 160g/km.

Besides, the 100% first year allowance applicable to the cleanest cars is going to be extended from March 31, 2008 to March 31, 2013. A 100% discount will be offered to cars emitting 120g/km or CO2 or less.

The UK Government is working out the details but the move suggests that cars emitting less than 160g/km of CO2 have become far more tax efficient and more of the car’s value can be offset against taxable profits.

With low CO2 emissions, the cleaner models also help towards company car taxes, as well as having lower pence per mile running costs for the companies using them. When employees choose cleaner cars to cut their tax bills the employers also reap its benefits. Mostly, switching to a cleaner car can slash NIC cost by thousands of pounds.

There are a number of options available to acquire a cleaner model including Contract Hire, Personal Contract Purchase (PCP), Personal Contract Hire (PCH), Finance Lease and Lease Purchase. From Cheap Short Term Car Leasing in UK to Prestige Car Leasing Services in UK, several Car Leasing Companies offer an exciting array of cleaner cars. Fleet managers are increasingly opting for Contract Hire and Personal Contract Hire as Contract Hire providers tend to look favourably at the residual value knowing there will be a ready market for these vehicles at the end of the term.

The UK Government is encouraging buyers to choose cars emitting lesser CO2 with increased tax bills for cars that pollute more, and in the years to come a tougher approach will be taken. The banding system is likely to be used to spread the financial gap between the cleanest and thirstiest models.