HMRC have issued Brief 71/09 regarding modernising tax relief for business expenditure on cars. The Brief is of interest to all businesses that buy or lease cars or that sell or lease cars to other businesses.

At Budget 2009 the Government announced that the rules for capital allowances for cars and the associated rules restricting deductions for lease rentals were to be abolished and replaced by new rules from 1 April 2009 (for Corporation Tax purposes) or 6 April 2009 (for Income Tax purposes). The Capital Allowances Manual and Business Income Manual are to be updated to reflect the new rules and the transitional arrangements and draft guidance is available here. http://www.hmrc.gov.uk/briefs/company-tax/brief7109.htm

Comments are invited before 12 February 2010.