Capital allowances allow businesses to secure tax relief for certain capital expenditure. Qualifying expenditure on cars must usually be allocated to one of two general pools of expenditure. Which pool is appropriate depends on the car’s CO2 emissions.Expenditure on cars with CO2 emissions over 130g/km will be dealt with in the special rate pool and will attract a WDA of 8% p.a.Expenditure on cars with CO2 emissions from 76g/km of up to and including 130g/km driven will be dealt with in the main pool and will attract a WDA of 18% p.a.From 1 April 2018, the emissions threshold will be reduced to 110g/km. Cars that have an element of non-business use, by the self-employed, must be allocated to a single asset pool with a rate of either 18% or 8% to enable the private use adjustment to be made.First year allowances (FYA’s) are available for expenditure on new electric cars and cars with CO2 emissions up to 75g/km. This expenditure benefits from 100% capital allowances. The limit of 75g/km is to be reduced to 50g/km from 1 April 2018. The FYA’s that related to low CO2 emission cars was due to expire on 31 March 2018 but has now been extended until at least 31 March 2021.There are different CO2 emission bands for cars bought between April 2013 and April 2015 and between April 2009 and April 2013.Planning note:Clearly, there are many considerations to study before making an investment in a new or second-hand car for use in your business: how will you fund the purchases, what are the driver related tax costs (benefits in kind), as well as the tax breaks that your business will be eligible to claim? The calculations can be somewhat convoluted. Please call if you would like help in this area.