If a company leases its cars, then the finance element of the lease rental that the company pays constitutes a cost that can be offset against its profits (normally in the year that they are incurred), therefore paying less corporation tax.
Prior to April 2021, the Lease Rental Restriction's were different to how they are now.
For contracts entered into between April 2018 and March 2021, tax relief for leased cars will be limited according to the CO₂ emissions as follows:
| CO₂ Emissions (g/km) | Allowed Rentals | Disallowed Rentals |
| 110 g/km or below | 100% | 0% |
| Above 110 g/km | 85% | 15% |
For corporation tax purposes the thresholds noted above apply for cars leased on or after 1 April 2018. For income tax purposes the thresholds apply for cars leased on or after 6 April 2018.
For contracts entered in to between April 2013 and March 2018, tax relief for leased cars is will be limited according to the CO₂ emissions as follows:
| CO₂ Emissions (g/km) | Allowed Rentals | Disallowed Rentals |
| 130 g/km or below | 100% | 0% |
| Above 130 g/km | 85% | 15% |
For corporation tax purposes the thresholds noted above apply for cars leased on or after 1 April 2013. For income tax purposes the thresholds apply for cars leased on or after 6 April 2013.
For contracts entered in to between April 2009 and March 2013, tax relief for leased cars is limited according to the CO₂ emissions as follows:
| CO₂ Emissions (g/km) | Allowed Rentals | Disallowed Rentals |
| 160 g/km or below | 100% | 0% |
| Above 160 g/km | 85% | 15% |
For corporation tax purposes, the thresholds noted above apply for cars leased on or after 1 April 2009. For income tax purposes, the thresholds apply for cars leased on or after 6 April 2009.
For information about current Lease Rental Restrictions, please view our latest Tax Card:
