It somehow seems appropriate that, as we see out 2008, this should be my 100th blog entry.

So I wish you all joy on old year’s night. And, despite the economic gloom, a prosperous, or at least healthy, new year.

But here’s one new year’s resolution for you.

If you’re a small business and purchase your business cars, there is a major change to their corporation tax treatment in 2009.

Starting April, it needs serious consideration now. Because corporation tax on business cars will be assessed on CO2 emissions rather than a car’s value.

In very general terms, those cars with emissions above 160g/km will cost a business more than those cars with emissions below 160g/km – because their capital cost will have to be written down at 10% on a reducing balance basis. There is no balancing charge available when the car is sold.

However, the other thing to consider is contract hire. Because at the same time more of a contract hire rental can be put against your p&l account. Which is all good news.

For cars with emissions below 160g/km, 100% of the rental is allowable; for cars with emissions above 160g/km, 85% of the rental is allowable.

For more on this, talk to your BVRLA-approved car leasing broker, your accountant, your contract hire company, or take a look at our website where we have a Special Report on the subject: Capital allowances: should you still buy high emission cars?

Whatever you do, have a great 2009. April corporation tax and contract hire changes