Capital Allowance & Car
If your company buys cars which are used for work purposes, e.g. provided as a perk to an employee, it can claim a tax deduction for the cost in the form of capital allowances (CAs)(HMRC’s equivalent to depreciation). CAs are usually allowed at one of two rates: 8% or 18% of the cost of the car per year. The rate depends on the car’s CO2 emissions. For a limited period a third CAs rate of 100% of the cost in the year of purchase can be claimed but only for certain types of car.
100% CAs are allowed if the car purchased has CO2 emissions of less than 75g/km but you must claim the 100% allowance against the profit in the financial period in which you buy the car and the car must be brand new and unused (apart from delivery mileage).
Please note there are tax implications for the employee of having a company car.