Capital Allowances Calculation*
We've calculated the capital allowances for your selected car based on its replacement cycle and the total mileage travelled.
Changing the calculation
You can change the replacement cycle or the total mileage using the selection boxes.
You can also change the On-The-Road Price of the vehicle or the forecast residual value (these affect the capital allowances granted).
Just type a new amount into either the 'O-T-R Price' or 'Residual Value' boxes. Press the 'Enter' key after each change to update the calculation.
We'll automatically adjust the total O-T-R Price for the tax disc which, although it has to be included in the O-T-R Price, isn't included in the capital allowances calculation.
Scroll down to see how the capital allowances are calculated each year.
We have simplified the above example - it assumes just one asset (the car) is owned by the business.
When calculating capital allowances, the value of a car is normally pooled with the value of all the other assets owned by a business.
This includes cars, equipment, tools etc (unless the business accounts are prepared on a cash basis or the car has a CO2 output over 110GPK/m).
However, the overall effect of pooling is the same as our example above in terms of spreading capital allowances over an extended period well beyond the working life of the car.
The only current exception to this is cars with a CO2 output below 50GPK/m, which qualify for accelerated capital allowances known as 'First Year Allowances'.
100% of the capital cost of the car is allowed as a tax deduction in the tax year of purchase.
Residual values are based on information from our data partner CAP-HPI.
The example on this page simplifies the capital allowances calculation.
It ignores 'pooling', special first year allowances and private use by the self-employed/partnerships, but it does demonstrate the key principles and in particular the lengthy period over which business car expenditure is written-off for tax purposes.