Cars purchased or leased by companies from July 1st onwards will no longer qualify for capital allowances if they have a carbon emission figure greater than 190g/km.

Revenue officials said yesterday that if the measure was in force at present some 10,000 company cars would be affected.

However, because the new system only relates to cars purchased or leased after July 1st, vehicles which are in fleets prior to that date will continue to benefit from the current allowance system.

Of the cars bought after that date, only those with emissions up to 155 g/km will benefit from capital allowances at the current car value threshold of €24,000, regardless of the cost of the car.

Those with emissions levels of 156g/km to 190g/km will receive an allowance of 50 per cent of the current value threshold or 50 per cent of the cost of the car if lower.

However, those bought after July 1st with emissions in excess of 190g/km will no longer benefit from any allowance.

In terms of new cars leased from July 1st, the expenses involved for those with emissions up to 155g/km will rise up to a limit of €24,000.

Leased cars with emissions between 156g/km and up to 190g/km will qualify for a 50 per cent allowance on the leasing expenses.

Cars with emissions over 190g/km will no longer qualify for a deduction in leasing expenses.

As a result of the changes, diesel models and smaller, less polluting cars are likely to be the popular choice for new company cars from July 1st, according to industry spokesmen.