Environmental guidance for your business in Northern Ireland & Scotland

Taxes, tax breaks and grants for low-emission vehicles

Taxes, tax breaks and grants for low emission vehicles

You can benefit if you buy and use certain low-carbon emission cars and vans, and zero-emission goods vehicles.

Plug-in Car Grant

Vehicles eligible for a grant: there are different categories of vehicle based on CO2 emissions. The grant depends on which category the vehicle is in.

GOV.UK has details of the vehicles and the grants available.

GOV.UK: Low-emission vehicles eligible for a plug-in grant

Capital allowances

There are different rates of allowances that apply to cars bought:

  • from April 2015
  • between April 2013 and April 2015
  • between April 2009 and April 2013

The rate of allowance also depends on:

  • the CO2 emissions (or if electric)
  • whether it was purchased new or second hand

You can find the rates of allowances on the GOV.UK website.

GOV.UK: Claim Capital allowances - business cars

Vehicle taxes

There are a number of taxes that affect, or could affect, your business' use of motor vehicles. These taxes aim to encourage you to reduce your vehicle use and emissions.

New cars have fuel economy labels which show how fuel efficient they are. The label shows how much CO2 the car emits and also how much vehicle tax you will have to pay each year. Lower CO2 emissions mean lower vehicle tax and lower running costs.

Road tax, or vehicle excise duty (VED), and the company car tax system are now based on the amount of CO2 emissions that a vehicle produces, with the most polluting cars paying the highest rate. Find the VED payable on cars on the Vehicle Certification Agency (VCA) website.

Vehicle Certification Agency: Car fuel consumption and CO2 tools

Find information on tax for company cars and how to calculate the benefit-in-kind tax payments for them on the HM Revenue & Customs (HMRC) website.

HM Revenue & Customs (HMRC): Company cars

You could significantly reduce the rate of fuel duty you pay by switching your existing vehicles to run on alternative fuels such as liquid petroleum gas (LPG), bioethanol or biodiesel.

HMRC: Fuel duty rates

Road pricing and congestion charging

You may be able to claim road-pricing concessions for low-emission vehicles in local councils where such schemes exist. Lorries, buses and vans that have low emissions will also avoid paying charges in some areas). See the page in this guideline on how to comply with vehicle emissions requirements.

Currently, there are few areas with congestion charging and road tolls but keeping your use of vehicles to a minimum will ensure that you are prepared if further costs on drivers are introduced.

Setting up a travel plan could also help you reduce the impact of road charging. The tax and national insurance systems encourage employers to set up Travel Plans for their employees.

ChooseAnotherWay: Travel plans

In this guideline

Taxes, tax breaks and grants for low-emission vehicles

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