Capital Allowances Act 2001 section 45D

Expenditure on cars with low carbon dioxide emissions

Section 45D sets out the conditions under which expenditure on new zero-emission or electrically-propelled cars qualifies for first-year allowances, enabling the full cost to be deducted in the year of purchase.

• Expenditure on a brand new, unused car that is electrically propelled or has zero CO₂ emissions can qualify for 100% first-year allowances.
• The car must be first registered on or after 17 April 2002 with a qualifying emissions certificate, and the expenditure must be incurred by 31 March 2026 (corporation tax) or 5 April 2026 (income tax).
• To count as having low CO₂ emissions, the car's applicable CO₂ emissions figure must not exceed 0 grams per kilometre driven — effectively restricting eligibility to zero-emission vehicles.
• The definition of "car" for these purposes includes hackney carriages (licensed taxis), and the Treasury has power to extend the qualifying period and amend the emissions threshold by regulations or order.