delete The Capital Allowances Act 2001 (Car Emissions) (Extension of First-year Allowances) (Amendment) Order 2021
This Order extends first-year capital allowances for low-emission vehicles and gas refuelling infrastructure originally set to expire in 2021. It amends the Capital Allowances Act 2001 to: (1) extend the 100% first-year allowance for low CO2 emission cars to 2025 and tighten the threshold to 0g/km; (2) extend the 100% allowance for zero-emission goods vehicles from 11 to 15 years; (3) extend the 100% allowance for gas refuelling station plant to 2025; and (4) lower the 'main rate car' threshold from 110g/km to 50g/km. The Order includes transitional provisions for contracts entered into before the relevant dates.
This regulation represents government picking technological winners through the tax code, distorting market signals and allocating capital based on political determination rather than economic efficiency. The 100% first-year allowance mechanism creates fiscal costs (forgone Treasury revenue), typically benefits larger businesses most, and risks directing investment toward favoured technologies regardless of genuine market viability. While the threshold tightening from 50g/km to 0g/km represents a tightening, the underlying instrument remains a targeted subsidy. Such fiscal incentives for specific technologies should be evaluated through the budget process with full parliamentary scrutiny rather than maintained as permanent tax code features. The UK's competitive position in automotive manufacturing and related industries is better served by neutral tax treatment that allows market forces to determine adoption paths for low and zero-emission vehicles.