Currently 100% capital allowances are available when a business buys a motor car with CO2 emissions of no more than 75 grams per kilometer. Legislation has now been passed to reduce the threshold to just 50 grams from April 2018 but also to continue the tax relief for 3 years until 2021.
Normally motor cars only receive writing down allowance at the rate of 18% or 8% on a reducing balance basis, which means it can take several years to get tax relief for the cost of the vehicle. The cost of a low CO2 car can therefore be immediately written off against business profits.
Note: The motor car must be new and bought either for cash or on hire purchase to get the 100% tax relief.
Where the car is provided for use by a director or employee of the business then there would be a Benefit in Kind taxable on the individual based on the CO2 emissions and original list price of the car.