Capital Allowances on Company Car Calculator
When a limited company buys a car, the cost is relieved through capital allowances. The type of allowance and speed of relief depends on the car's CO2 emissions and whether it is new or used. Enter your car details to see the tax saving.
Frequently asked questions
What is the first-year allowance (FYA) for electric cars?
New zero-emission cars (0 g/km CO2) qualify for 100% first-year allowance, meaning your company can deduct the full purchase price from taxable profits in the year of purchase. At the 25% corporation tax rate, a £40,000 electric car saves £10,000 in tax in year one. This applies to new cars only — used EVs go into the main pool at 18% WDA.
What is the difference between the main pool and special rate pool?
The main pool has an 18% writing-down allowance (WDA) per year and applies to cars with CO2 of 1-50 g/km. The special rate pool has a 6% WDA and applies to cars with CO2 above 50 g/km. The pool determines how quickly you can deduct the cost from taxable profits.
Do used cars qualify for the 100% FYA?
No. The 100% first-year allowance for zero-emission vehicles is only available for new, unused cars. A used EV goes into the main pool and receives the standard 18% writing-down allowance each year.
How does corporation tax rate affect the saving?
The tax saving equals the capital allowance multiplied by your corporation tax rate. At the main 25% rate, every £1,000 of capital allowance saves £250 in corporation tax. Companies paying the small profits rate (19%) receive a proportionally smaller saving per pound of allowance.
Can a sole trader claim capital allowances on a car?
Yes. Sole traders and partnerships can claim capital allowances on cars used for business. The same CO2-based rules apply. However, the allowance is restricted to the business-use proportion of the car — if the car is used 60% for business, only 60% of the allowance is deductible.
These calculations are estimates based on 2026/27 HMRC and DVLA rates. Speak to a lender or qualified financial adviser for a personalised quote.