Corporation Tax Act 2009 section 56

Car hire

Section 56 restricts the tax deduction a company can claim for the cost of hiring certain cars, and applies a corresponding reduction to any rebates or debt releases relating to those hire charges.

• When a company hires a car that does not fall into one of four exempt categories, the allowable deduction for the hire cost is reduced by 15%.
• The four exempt categories are: cars first registered before 1 March 2001, cars with low CO₂ emissions, electrically propelled cars, and qualifying hire cars.
• If hire charges are subsequently rebated or a debt for hire charges is released (other than under a statutory insolvency arrangement), the amount brought into account as a trading receipt or post-cessation receipt is also reduced by 15%.
• The same 15% restriction applies where a corresponding reduction has been made under equivalent provisions for investment company management expenses or income tax purposes.