Income Tax (Trading and Other Income) Act 2005 section 50

Hiring cars (but not motor cycles) with low carbon dioxide emissions

Section 50 provides an exemption from the normal restriction on deducting car hire costs, where the hired car has low CO2 emissions or is electrically propelled.

• Cars with low CO2 emissions and electrically propelled cars are exempt from the usual 15% disallowance that applies to hire costs of expensive cars
• A car with low CO2 emissions is one registered with an EC certificate of conformity or UK approval certificate showing CO2 emissions of no more than 120 grams per kilometre driven
• An electrically propelled car is one powered solely by electricity, either from an external source or from a battery not connected to any power source while the car is in motion
• This exemption only applies to cars first registered on or after 17 April 2002; cars registered before that date remain subject to the standard hire cost restriction