Taxes Consolidation Act 1997 section 374

Capital allowances for cars costing over certain amount

Section 374 restricts the capital allowances available on motor vehicles where the cost of the car exceeds the specified amount, treating the specified amount (rather than the actual cost) as the relevant figure for wear and tear allowances, balancing allowances and balancing charges.

• Wear and tear allowances under section 284 are computed as if the cost of the car were the specified amount, where actual expenditure exceeded that figure.
• Balancing allowances and balancing charges are calculated on the same restricted basis, with sale, insurance, salvage or compensation moneys scaled down in the proportion that the specified amount bears to the actual cost.
• On non-arm's length transfers — gifts, connected party sales or business successions — the new owner's allowances and any deemed proceeds are reduced in the same proportion, and the restriction carries through any chain of such transfers.
• Where a replacement car triggers a section 290 election, or where a State or public authority subsidy reduces the net outlay, the specified amount restriction is applied before any further adjustment is made.