Corporation Tax Act 2009 section 58A

Short-term hiring in and long-term hiring out

Section 58A provides two exemptions from the car hire expense restriction in section 56: one for short-term car hire (45 days or fewer) and another for businesses that hire in cars and then sub-hire them to customers on a longer-term basis (more than 45 days).

• Car hire expenses are exempt from the section 56 restriction if the hire period is 45 consecutive days or fewer, including any linked periods within 14 days of each other
• Car hire expenses are also exempt where a company hires in a car and then sub-hires it to a customer for more than 45 consecutive days, provided the customer is not an employee or officer of the company (or a connected person)
• Neither exemption applies if the arrangements have a main purpose of avoiding or reducing the section 56 restriction, or any other form of tax avoidance
• Where a car is sub-hired for only part of the total hire period, the hire costs must be apportioned by time between the sub-hire period and the remainder, and only the sub-hire portion qualifies for exemption