Guide

Reducing your vehicle emissions

Tax breaks for low-emission vehicles

You can benefit if you buy and use certain low-carbon emission cars and vans, and zero-emission goods vehicles.

Capital allowances for business cars

If you buy a new car for your business that has CO2 emissions of 50 grams or less per kilometre (g/km) driven, or is electric, you can qualify for a 100 per cent first-year capital allowance. This allows you to offset the whole cost of the investment against taxable profits in the year you make the purchase.

For other cars, tax relief for business expenditure on cars is now based on CO2 emissions.

Find more information on allowance rates for different types of vehicles on the GOV.UK website.

Vehicle taxes

There are a number of taxes that affect, or could affect, your business' use of motor vehicles. These taxes aim to encourage you to reduce your vehicle use and emissions.

New cars have fuel economy labels which show how fuel efficient they are. The label shows how much CO2 the car emits and also how much vehicle tax you will have to pay each year. Lower CO2 emissions mean lower vehicle tax and lower running costs.

Road tax, or vehicle excise duty (VED), and the company car tax system are now based on the amount of CO2 emissions that a vehicle produces, with the most polluting cars paying the highest rate.

Find information on tax for company cars and how to calculate the benefit-in-kind tax payments.

You could significantly reduce the rate of fuel duty you pay by switching your existing vehicles to run on alternative fuels such as liquid petroleum gas (LPG), bioethanol or biodiesel - see fuel duty.