Income Tax (Trading and Other Income) Act 2005 section 48

Car hire

Section 48 restricts the tax deduction available for car hire costs where the hired car does not meet certain environmental or other qualifying criteria.

• The 15% restriction on car hire deductions applies unless the car was first registered before 1 March 2001, has low CO₂ emissions, is electrically propelled, or is a qualifying hire car.
• Where the restriction applies, the allowable deduction for hire charges is reduced by 15%.
• If a rebate of hire charges is received, or a hire charge debt is released (other than under a statutory insolvency arrangement), the amount brought into account as taxable income is also reduced by 15%.
• The same 15% reduction applies to any amount treated as a post-cessation receipt following the release of a debt for hire charges after the trade has ceased.