New Electric car purchased this year (under €50K). BIK is fine, no issue. The question has been asked of the client re business usage in terms of claiming 20% of the VAT. Q: Can client claim 100% capital allowances in year 1 irrespective of business usage?
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If the private use of the car is taxed as BIK then the company gets a full capital allowance for the car (limited to €24,000 p.a., see below) because it is akin to "emoluments".
See TCA 1997 s 285(8A):
(8A)(a) In the case of cars coming under the category “Electric and Alternative Fuel Vehicles” the accelerated allowance is based on the lower of the actual cost of the vehicle or the specified amount of €24,000 (referred to in section 380K(4)), which is the maximum limit applying in respect of capital allowances for business cars. This provision applies to cars only and not to other vehicles.
(8A)(b) The emissions-based capital allowances scheme for cars, introduced in the Finance Act 2008 and included in Part 11C will not apply where a company opts to avail of accelerated capital allowances for fuel efficient cars under the scheme for energy-efficient equipment in section 285A. The converse also applies so that a company can opt for one scheme or the other, but not both.
Also Revenue manual 09-02-04:
Electric and Alternative Fuel Vehicles
This category is included in the scheme as part of the strategy to promote greater usage of low-emissions vehicles.
Section 37 of the Finance (No. 2) Act, 2008 inserted a new subsection 8A into section 285A. The new subsection, ensures that in the case of cars coming under the category “Electric and Alternative Fuel Vehicles” the accelerated allowance is based on the lower of the actual cost of the vehicle or the specified amount of €24,000 referred to in section 380K(4) TCA, 1997.
The emissions-based scheme in Tax and Duty Manual Part 11-00-01 - 11C will not apply where a person opts to avail of accelerated capital allowances under section 285A. The converse also applies so that a person can opt for one scheme or the other, but not both, insofar as business cars are concerned.
For electric or alternative fuel cars, a person may opt for the accelerated allowance scheme for energy efficient equipment under section 285A or the existing emissions based scheme of allowances under Tax and Duty Manual Part 11-00-01 - 11C.
The latter scheme, which was introduced in Finance Act 2008, is based on the emissions levels of cars. Under this scheme an allowance is available at 12.5% over a period of 8 years based on a “specified amount” of €24,000 for low emission cars regardless of the actual cost. For example, capital allowances based on allowable expenditure of €24,000 will be available for a car with CO2 emissions of less than 156g/km even where the actual cost of the car is lower. However, where the cost of such a car exceeds €24,000 the capital allowances are restricted to the “specified amount” of €24,000.
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