Vehicles
Vehicle insurance
Vehicle insurance can be claimed where you are claiming actual running costs of a business vehicle, but not if you are using the mileage method.
Buying a car (capital allowances)
Buying a car for business use is a capital purchase, not a day-to-day expense. The cost is recovered through capital allowances over a number of years — but cars are specifically excluded from the Annual Investment Allowance (AIA), and the rate of relief is dictated by the car's CO2 emissions. From April 2026 the main pool writing-down allowance dropped from 18% to 14%.
Vans & commercial vehicles
Vans, lorries and other commercial vehicles are treated as plant and machinery for capital allowances purposes — not as cars. This matters enormously: commercial vehicles qualify for the Annual Investment Allowance (AIA), so the full purchase cost (up to £1 million) can typically be deducted against profits in the year of purchase. Cars are specifically excluded from the AIA and written down much more slowly.
Car leasing & contract hire
Lease and contract hire rental payments for a car are an allowable business expense — but a statutory 15% flat-rate disallowance applies if the car's CO2 emissions exceed 50g/km (for cars from April 2021). Zero and low-emission cars below the threshold attract no disallowance and can be deducted in full, subject to any private-use restriction.
Fuel & motoring costs
The tax treatment of fuel and other running costs depends entirely on whether you are using the actual-costs method or the simplified mileage rate — you cannot use both for the same vehicle. For company cars, HMRC publishes advisory fuel rates (reviewed quarterly) that set the tax-free reimbursement rate for each fuel type and engine size; private fuel provided alongside a company car creates a separate taxable benefit.
Electric vehicle charging
Business EV charging costs are allowable, but the rules vary significantly depending on where charging takes place and who owns the vehicle. Workplace charging provided by an employer is exempt from benefit-in-kind tax under a specific statutory exemption. Home charging is not exempt. Company electric cars carry a low — but rising — benefit-in-kind rate. Advisory electric rates for mileage reimbursement split between home and public charging from June 2026.