Generally first year allowances can not be claimed on vehicles except if that vehicle is deemed to be a commercial vehicle. The inland revenue website contains a list of vehicles it considers to be vans and commercial vehicles and first year allowances can be claimed. Cars and commercial vehicles not on the approved list are not subject to a first year allowance except new vehicles with low CO2 emissions below 120gm per km driven.

The writing down allowance is 25% of the net written down value for tax purposes and is the amount of capital allowance claimed on fixed assets after the first year and in the case of motor vehicles used for business purposes in the first year. Capital allowances on motor vehicles being restricted to a maximum of 3,000 pounds per vehicle and vehicles costing over 12,000 pounds being in a separate section of the tax return to those under 12,000 pounds

The capital allowance section of the self assessment tax return form also includes the term balancing charges. A balancing charge arises when an asset is sold or disposed of and is the difference between the amount received and the net written down value for tax purposes. Net written down value is the original cost less capital allowances that have already been claimed against the net taxable profit.

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