Allowances Guide
A guide to Annual investment / First Year / Writing down allowances
When you buy a taxi, tax relief on the capital cost depends on CO2 emissions. Here is how first-year, main-rate and special-rate pools work - and what TaxiManager claims separately from loan interest.
By Paul Taylor, Registered tax professional Last updated:
Vehicle purchase
Interest versus capital cost
Finance charges and the purchase price are claimed in different ways.
When you buy a vehicle, the tax allowances are governed by the emission of the vehicle. That figure is on the second page of the vehicle's V5C.
Within TaxiManager you only claim the interest part of your finance or loan agreement, including any set-up or admin charges. The capital cost - the amount you paid for the vehicle - is then claimed as a separate allowance.
Where TaxiManager PRO has been purchased, we work out the most tax-efficient way to claim any allowances.
As a guide
Allowance rates and CO2 thresholds
Which pool applies depends on whether the car is new or used, and on its emissions.
- 100% First-year allowance: available for brand new, unused electric cars or zero-emission vehicles, allowing you to deduct the full cost in the purchase year.
- 14% Main Rate Pool: applies to new/unused cars with CO2 emissions up to 50g/km, second-hand electric cars, and second-hand low-emission cars (active from April 2026; previously 18%).
- 6% Special Rate Pool: applies to any new or second-hand cars with CO2 emissions exceeding 50g/km.
Private use still restricts the claim
All of these claims are restricted for commencement provisions and the percentage deemed to have been private use. An honest private-use adjustment matters here as well as on running costs.
TaxiManager
Keep vehicle allowances with the rest of your records
Track the car, finance interest and capital figures in one place - ready for Self Assessment.
PRO
How TaxiManager PRO helps
Capital allowance calculations as part of the Self Assessment submission service.
All TaxiManager PRO users have this calculation service as part of the Self Assessment submission service. That means the right pool, rate and private-use restriction are applied when the return is prepared - not left as a year-end guess.
For how private use interacts with motor expenses, see Private use explained. For budgeting tax as the year runs, see Paying tax and National Insurance.
For taxi drivers
Claim the right vehicle allowance - not just the interest.
Record purchase details and let PRO work out the most efficient capital allowances for Self Assessment.
Keep reading
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