Finance Act 2008

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Capital allowances and expenses for business cars.

31.— (1) The Principal Act is amended by inserting the following after Part 11:

“PART 11C

Emissions-based Limits on Capital Allowances and Expenses for Certain Road Vehicles

Interpretation and general (Part 11C).

380K.— (1) Subject to section 380P(1), this Part and not Part 11 shall apply to a vehicle which is a mechanically propelled road vehicle constructed or adapted for the carriage of passengers, other than a vehicle of a type not commonly used as a private vehicle and unsuitable to be so used.

(2) Any reference in this Part to a vehicle in any of the vehicle Categories A to G as set out in the first column of the Table to this subsection is a reference to a vehicle whose CO ₂ emissions, confirmed by reference to the relevant EC type approval certificate or EC certificate of conformity, are set out in the corresponding entry in the second column of the Table to this subsection.

TABLE

(3) Where the Revenue Commissioners are not satisfied of the level of CO ₂ emissions relating to a vehicle by reference to any document other than either of the certificates referred to in subsection (2), or where no document has been provided, the vehicle shall, for the purposes of this Part, be treated as if it were a vehicle in Category G.

(4) In this Part—

‘ CO ₂ emissions ’ means the level of carbon dioxide (CO ₂) emissions for a vehicle measured in accordance with the provisions of Council Directive 80/1268/EEC of 16 December 1980 (as amended) and listed in Annex VIII of Council Directive 70/156/EEC of 6 February 1970 (as amended) and contained in the relevant EC type approval certificate or EC certificate of conformity or any other appropriate documentation which confirms compliance with any measures taken to give effect in the State to any act of the European Communities relating to the approximation of the laws of Member States in respect of type approval for the type of vehicle concerned;

‘ specified amount ’, in relation to expenditure incurred on the provision or hiring of a vehicle to which this Part applies, means €24,000, where the expenditure was incurred—

(a) in an accounting period ending on or after 1 January 2007, or

(b) in a basis period for a year of assessment where that basis period ends on or after 1 January 2007.

(5) This Part shall be construed as one with Part 9.

Emissions-based limits for certain cars.

380L.— (1) In relation to a vehicle to which this Part applies, where an allowance which, apart from this section, would be made under section 284 is to be increased or reduced, as the case may be, by virtue of this section, any reference in the Tax Acts to an allowance made under section 284 shall be construed as a reference to that allowance as increased or reduced under this section.

(2) In relation to a vehicle to which this Part applies, the allowances under section 284 to be taken into account for the purposes of Chapter 2 of Part 9 in computing the amount of expenditure still unallowed at any time shall be determined by reference to the allowances computed in accordance with this section, and the expenditure incurred on the provision of the vehicle to be taken into account for the purposes of that Chapter shall be determined accordingly.

(3) Section 284 shall apply as if, for the purposes of that section, the actual cost of the vehicle were taken to be—

(a) in the case of a vehicle in Category A, B or C, an amount equal to the specified amount,

(b) in the case of a vehicle in Category D or E, where the retail price of the vehicle at the time it was made was—

(i) less than or equal to the specified amount, 50 per cent of that price, and

(ii) greater than the specified amount, 50 per cent of the specified amount,

and

(c) in the case of a vehicle in Category F or G, nil.

(4) Where expenditure has been incurred on the provision of a vehicle to which this Part applies, then any balancing allowance or balancing charge shall be computed, in a case where there are sale, insurance, salvage or compensation moneys, as if the amount of those moneys (or, where in consequence of any provision of the Taxes Acts, other than Part 11 or this section, some other amount is to be treated as the amount of those moneys, that other amount) were—

(a) in the case of a vehicle in Category A, B or C, increased or reduced, as the case may be, in the proportion which the specified amount bears to the actual amount of that expenditure,

(b) in the case of a vehicle in Category D or E where the expenditure incurred was—

(i) less than or equal to the specified amount, reduced by 50 per cent, and

(ii) greater than the specified amount, reduced in the proportion which 50 per cent of the specified amount bears to that actual amount of that expenditure,

and

(c) in the case of a vehicle in Category F or G, nil.

(5) (a) Where expenditure is incurred on the provision of a vehicle to which this Part applies and—

(i) the person providing the vehicle (in this section referred to as the ‘prior owner’) sells the vehicle or gives it away so that subsection (5) of section 289, or that subsection as applied by subsection (6) of that section, applies in relation to the purchaser or donee,

(ii) the prior owner sells the vehicle and the sale is a sale to which section 312 applies, or

(iii) in consequence of a succession to the trade or profession of the prior owner, section 313(1) applies,

then, in relation to the purchaser, donee or successor, the price which the vehicle would have fetched if sold in the open market or the expenditure incurred by the prior owner on the provision of the vehicle shall be treated for the purposes of section 289, 312 or 313 as—

(I) in the case of a vehicle in Category A, B or C, an amount equal to the specified amount,

(II) in the case of a vehicle in Category D or E where the retail price of the vehicle at the time it was made was—

(A) less than or equal to the specified amount, 50 per cent of that price, and

(B) greater than the specified amount, 50 per cent of the specified amount,

and

(III) in the case of a vehicle in Category F or G, nil,

and, in the application of subsection (4) to the purchaser, donee or successor, references to the expenditure incurred on the provision of the vehicle shall be construed as references to the expenditure so incurred by the prior owner.

(b) Where paragraph (a) has applied on any occasion in relation to a vehicle, and no sale or gift of the vehicle has since occurred other than one to which either section 289 or 312 applies, then, in relation to all persons concerned, the like consequences under paragraph (a) shall ensue as respects a gift, sale or succession within subparagraphs (i) to (iii) of that paragraph which occurs on any subsequent occasion as would ensue if the person who in relation to that sale, gift or succession is the prior owner had incurred expenditure on the provision of the vehicle of an amount equal to the expenditure so incurred by the person who was the prior owner on the first-mentioned occasion.

(6) In the application of section 290 to a case where the vehicle is the new machinery referred to in that section, the expenditure shall be disregarded in so far as it exceeds—

(a) in the case of a vehicle in Category A, B or C, the specified amount,

(b) in the case of a vehicle in Category D or E, where the retail price of the vehicle at the time it was made was—

(i) less than or equal to the specified amount, 50 per cent of that price, and

(ii) greater than the specified amount, 50 per cent of the specified amount,

and

(c) in the case of a vehicle in Category F or G, nil,

but without prejudice to the application of subsections (1) to (5) to the vehicle.

(7) Expenditure shall not be regarded for the purposes of this Part as having been incurred by a person in so far as the expenditure has been or is to be met directly or indirectly by the State or by any person other than the first-mentioned person.

Limit on deductions, etc. for hiring cars.

380M.— Where apart from this section the amount of any expenditure on the hiring (otherwise than by means of hire-purchase) of a vehicle to which this Part applies would be allowed to be deducted or taken into account as mentioned in section 375, then the amount of that expenditure shall—

(a) in the case of a vehicle in Category A, B or C, be increased or reduced, as the case may be, in the proportion which the specified amount bears to the retail price of the vehicle at the time it was made,

(b) in the case of a vehicle in category D or E where the retail price of the vehicle at the time it was made was—

(i) less than or equal to the specified amount, be reduced by 50 per cent, and

(ii) greater than the specified amount, be reduced in the proportion which 50 per cent of the specified amount bears to that price,

and

(c) in the case of a vehicle in category F or G, be nil.

Cars: provisions as to hire-purchase, etc.

380N.— (1) In the case of a vehicle to which this Part applies, subsections (2) to (4) shall apply.

(2) Where a person, having incurred capital expenditure on the provision of a vehicle to which this Part applies under a contract providing that such person shall or may become the owner of the vehicle on the performance of the contract, ceases to be entitled to the benefit of the contract without becoming the owner of the vehicle, then that expenditure shall, in so far as it relates to the vehicle, be disregarded for the purposes of Chapter 2 of Part 9 and in determining what amount (if any) is allowable as mentioned in section 375.

(3) Where subsection (2) applies, all payments made under the contract shall be treated for tax purposes (including in particular for the purposes of section 380M) as expenditure incurred on the hiring of the vehicle otherwise than by means of hire-purchase.

(4) Where the person providing the vehicle takes it under a hire-purchase contract, then, in apportioning the payments under the contract between capital expenditure incurred on the provision of the vehicle and other expenditure, so much of those payments shall be treated as such capital expenditure as is equal to the price which would be chargeable, at the time the contract is entered into, to the person providing the vehicle if that person were acquiring it on a sale outright.

Cars: provisions where hirer becomes owner.

380O.— Where, having hired (otherwise than by means of hire-purchase) a vehicle to which this Part applies, a person subsequently becomes the owner of the vehicle, then, for the purposes of the Tax Acts (and in particular sections 380L and 380M)—

(a) so much of the aggregate of the payments for the hire of the vehicle and of any payment for the acquisition of the vehicle as does not exceed the retail price of the vehicle at the time it was made shall be treated as capital expenditure incurred on the provision of the vehicle, and as having been incurred when the hiring began, and

(b) the payments to be treated as expenditure on the hiring of the vehicle shall be rateably reduced so as to amount in the aggregate to the balance.

Provisions supplementary to sections 380L to 380O.

380P.— (1) Sections 380L and 380M, subsections (2) and (3) of section 380N and section 380O shall not apply where a vehicle is provided or hired, wholly or mainly, for the purpose of hire to or the carriage of members of the public in the ordinary course of trade.

(2) Section 380L, subsections (2) and (3) of section 380N and section 380O shall not apply in relation to a vehicle provided by a person who is a manufacturer of a vehicle to which this Part applies, or of parts or accessories for such a vehicle, if the person shows that the vehicle was provided solely for the purpose of testing the vehicle or parts or accessories for such vehicle; but, if during the period of 5 years beginning with the time when the vehicle was provided, such person puts it to any substantial extent to a use which does not serve that purpose only, this subsection shall be deemed not to have applied in relation to the vehicle.

(3) (a) There shall be made all such additional assessments and adjustments of assessments as may be necessary for the purpose of applying subsections (2) and (3) of section 380N, section 380O and subsection (2), and any such additional assessments or adjustments of assessments may be made at any time.

(b) In the case of the death of a person who, if he or she had not died, would under subsections (2) and (3) of section 380N, section 380O and subsection (2) have become chargeable to tax for any year, the tax which would have been so chargeable shall be assessed and charged on his or her executors or administrators and shall be a debt due from and payable out of his or her estate.”.

(2) Subsection (1) applies to expenditure incurred on the provision or hiring of a vehicle on or after 1 July 2008.