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By Ralph Morton, editor, Business Car Manager

In April 2009, the rules on business car expenditure changed.

Old methods of accounting for company cars were replaced by new rules based on CO2 emissions.

The changes are fundamental. They could cost your business money if you make the wrong company car selection. So what changed?

Leasing cars: why it looks a good bet

The most important thing to note is how attractive car leasing has become. The old expensive car leasing disallowance (also known as the ‘half the excess rule’) has been replaced by a new car leasing disallowance. It’s based on CO2 emissions.

If you lease your business car and the emissions are below 161g/km, then the full amount of the net rental can be charged against the p&l account. That’s a significant advantage to a small business. Even for company cars with emissions above 161g/km, then 85% of the rental can be put against your company’s tax bill.

Writing down allowance changed as well

The other major change was to the method of writing down your company cars for the purposes of corporation tax. Again it’s now based on CO2 emissions. But whereas the full cost of the car could be accounted for when it was sold