CA23153 - Plant and Machinery Allowance (PMA): First Year Allowance (FYA): expenditure on electric cars and cars with zero carbon dioxide emissions

CAA01/S45D

Cars do not qualify for annual investment allowance, super-deduction, full expensing or 50% first-year allowances.听Instead, the capital allowance treatment听of capital expenditure on a car听depends on its听carbon dioxide emissions (see听CA23535听for an outline of the rules).听

A 100% FYA is available for capital expenditure on the provision of a car if:

  • the car is 鈥榰nused and not second hand鈥�, and is first registered on or after 17 April 2002;
  • it is an electric car or a car with qualifying CO2 emissions of not more than a specified amount (from 1 April 2021 the limit is 0gm per km driven.听Limits for previous years can be found at听鈥楥laim capital allowances 鈥� Business Cars鈥�,听gov.uk)听;听
  • the expenditure is incurred between 17 April 2002 and
    • 31 March 2026 for Corporation Tax purposes, or
    • 5 April 2026 for Income Tax purposes; and
  • the expenditure is not excluded by the general FYA exclusions in CAA01/S46, see CA23113.

A hybrid car will not qualify for this 100% FYA because alongside its electric motor,听it includes an internal combustion engine which produces CO2 emissions.

Meaning of 'unused and not second hand'

You should accept a car is unused and not second hand even if it has been driven a limited number of miles for the purposes of testing, delivery, test driven by a potential purchaser, or used as a demonstration car.

The fact that such cars (or cars that have not been driven at all) may have been pre-registered to a dealer does not prevent you from treating them as 'unused and not second hand.'

How to establish a car's carbon dioxide emissions figure

For information about emissions figures, see听CA23545.

Definition of 'car'


For the purpose of the 100% FYA the term 鈥榗ar鈥� follows the definition听in CAA01/S268A, see听CA23510, but is also extended to a vehicle 鈥榦f a type commonly used as a hackney carriage鈥�听(a traditional 鈥楲ondon black cab鈥�听type of vehicle). In other words,听a hackney carriage will听qualify for the 100% FYA听if it听meets the conditions above even though it would not be regarded听as a car for other capital allowance purposes, such as the exclusion from the Annual Investment Allowance.