In his latest article for Business Gazette, Michael Proudfoot, Kendal-based partner in Lonsdale & Partners, chartered accountants, advises how you can maximise tax relief on your company car.

Historically, a car purchased by a business has been eligible for a tax deduction by way of capital allowances.

However, these have been restricted to 25 per cent per annum and in the case of cars costing £12,000 and over to an annual maximum of £3,000.

In order to encourage investment in ' cleaner' cars, new rules have been introduced which allow a 100 per cent up-front tax deduction, provided certain conditions are satisfied.

Remember that if the car is for the proprietor of an unincorporated business, the allowances will be restricted to take account of the proportion of private use.

Note that 100 per cent allowances are also currently available for the following: expenditure on certain energy saving plant and machinery (eg boilers and refrigeration equipment); and for small businesses, expenditure on computers, software

and internet-enabled mobile phones (until March 31, 2003).