HMRC's latest Agent Update confirms that the 100% First Year Allowances (FYA) for business cars, zero-emission goods vehicles and equipment for gas refuelling stations will be extended from April 2021 until April 2025 after all. The measure had been omitted from Finance Act 2020.
Due to end on 31 March 2021, the current FYA rules will be extended through until April 2025 in line with the government's strategy to end sales of new petrol, diesel and hybrid cars/vans by 2035 or earlier. What qualifies for the 100% FYA has been further restricted to encourage expenditure on zero-emission products. The measures were originally announced in March 2020 but were not enacted in the Finance Act 2020.
- Equipment for gas refuelling stations will continue under the current rules (natural gas/biogas/hydrogen fuel), as will zero-emission goods vehicles.
- The 100% FYA will continue to be available for zero-emission or electric business cars only.
- Business cars with emissions of 50g/km or below will qualify for the standard Writing Down Allowance (WDA) of 18%.
- Business cars over 50g/km will only qualify for the reduced WDA of 6%.
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