Last updated: 14 October 2026
Do first-year allowances for zero-emission cars still apply?
Yes. The 100% first-year allowance for new, unused zero-emission cars has been extended to 31 March 2027 for companies (corporation tax) and 5 April 2027 for unincorporated businesses (income tax). The same deadlines apply to the 100% allowance for electric vehicle chargepoints. This means a business can deduct the full cost of a new electric car from its taxable profits in the year it buys it.
What qualifies
| Asset | Allowance | Deadline |
| New, unused car with 0g/km CO2 | 100% first-year allowance | 31 March 2027 (CT) / 5 April 2027 (IT) |
| Electric vehicle chargepoint | 100% first-year allowance | 31 March 2027 (CT) / 5 April 2027 (IT) |
| Used electric car | 14% main pool writing down allowance | No deadline |
| Car with 1 to 50g/km CO2 | 14% main pool | No deadline |
| Car over 50g/km CO2 | 6% special rate pool | No deadline |
Cars don’t qualify for the Annual Investment Allowance or full expensing, so the first-year allowance is the only way to get full relief on a car in year one.
Example
Parkside Design Ltd buys a new electric car costing £42,000 for its director in May 2026. It claims the 100% first-year allowance, cutting its taxable profit by £42,000. At 25% corporation tax, that saves £10,500. The director pays benefit in kind on the car at 4% of the list price in 2026/27, rising to 5% in 2027/28, 7% in 2028/29 and 9% in 2029/30.
Sole traders and private use
A sole trader can claim the allowance too, but only the business share. If the car is used 70% for business, 70% of the cost is deductible. Companies can claim the full cost, as private use by employees is taxed through the benefit in kind rules instead.
Leasing vs buying
Leased cars don’t get capital allowances. Instead, lease rentals are deductible. For cars with emissions over 50g/km, 15% of the lease cost is disallowed. Electric cars avoid that restriction.
Selling the car later
When the car is sold, the sale price is a balancing charge, which is taxable. If you claimed 100% and later sell for £20,000, that £20,000 is added to profits. Plan the timing of a sale with your accountant.
Plan the purchase date
To be sure of the allowance, the car must be bought, and the expenditure incurred, by the deadline. If you buy on hire purchase, the allowance is usually available when the car is brought into use. Check the government’s position after April 2027, as further extensions are not guaranteed.
Chargepoints
A chargepoint installed at your business premises or an employee’s home (if the business owns it) qualifies. A workplace charging facility for employees is also exempt from benefit in kind.
Records to keep
Keep the purchase invoice, the V5C showing first registration, and evidence of the CO2 figure. HMRC may ask for these if it checks the claim. For a sole trader, a mileage log supports the business-use percentage claimed.
Frequently asked questions
Can I claim on a used electric car?
No, only new and unused cars qualify for 100%.
Is a hybrid car zero-emission?
No, unless it has 0g/km CO2.
Do vans qualify?
Electric vans qualify for full expensing or AIA instead.
Does the allowance apply to cars for leasing?
No, cars bought for leasing are excluded.
Related: electric company cars and private use, EV charging tax treatment and capital allowances after the super-deduction.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with company car and capital allowances. See our small business accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 14 October 2026. It is not personal advice, so speak to an accountant about your own situation.
