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Chartered Certified Accountants
and Business Advisors

01530 447999

Resources

Capital Allowances

  • The cost of purchasing capital equipment in a business is not a revenue tax deductible expense. However, tax relief is available on certain capital expenditure in the form of capital allowances.
  • Plant and machinery allowances may be available on items such as machines, equipment, furniture, certain fixtures in a building ('integral features'), computers, cars, vans and similar equipment used in a business. 
  • There are special rules for cars and certain 'environmentally friendly' equipment.
  • Plant and machinery allowances may be available to owners of commercial property which is let out to a business.
  • The Annual Investment Allowance (AIA) gives a 100% write-off on most types of plant and machinery (but not cars) up to an annual limit.
  • Writing down allowances (WDA) are given for expenditure for which AIA is not, or cannot be, claimed.
  • Structures and Buildings Allowance is introduced from 29 October 2018 at a rate of 2% on a straight line basis.

AIA

  • Special rules apply to accounting periods straddling the dates shown in the tables below.
  • The AIA may need to be shared between certain businesses under common ownership.

AIA limits - companies

Expenditure incurred:

Annual limit

£
From 1 January 2016 to 31 December 2018 200,000
From 1 January 2019 1,000,000

AIA limits - sole traders and partnerships

Expenditure incurred:

Annual limit

£
From 1 January 2016 to 31 December 2018 200,000
From 1 January 2019 1,000,000

Other plant and machinery allowances

  • Expenditure upon which AIA is not given/claimed will obtain relief through the 'main rate pool' or the 'special rate pool' rather than each item being dealt with separately.
  • The annual rate of WDA is 18% in the 'main rate pool' and 6% in the 'special rate pool'. The 8% WDA is reduced to 6% from April 2019. Special rules apply to accounting periods straddling this date.
  • A 100% first year allowance (FYA) may be available on certain energy efficient plant and cars.

Cars

  • For expenditure incurred on cars, costs are generally allocated to one of the two plant and machinery pools.
  • AIA is not available on any car but a 100% first year allowance may be available on certain cars. To qualify for first year allowance, the car must be purchased new.

Cars acquired from April 2018

Emissions (g/km)

Pool

Allowance

≤50 Main rate 100% FYA
≤ 110 Main rate 18% WDA
>110 Special rate 6% WDA
  • The cost of purchasing capital equipment in a business is not a revenue tax deductible expense. However, tax relief is available on certain capital expenditure in the form of capital allowances.
  • Plant and machinery allowances may be available on items such as machines, equipment, furniture, certain fixtures in a building (' integral features '), computers, cars, vans and similar equipment used in a business.
  • There are special rules for cars and certain 'environmentally friendly' equipment.
  • Plant and machinery allowances may be available to owners of commercial property which is let out to a business.
  • The Annual Investment Allowance (AIA) gives a 100% write-off on most types of plant and machinery (but not cars) up to an annual limit.
  • Writing down allowances (WDA) are given for expenditure for which AIA is not, or cannot be, claimed.

AIA

  • Special rules apply to accounting periods straddling the dates in the tables below.
  • The AIA may need to be shared between certain businesses under common ownership.

AIA limits - companies

Expenditure incurred:

Annual limit

£
From 1 January 2016 to 31 December 2018 200,000
From 1 January 2019 1,000,000

AIA limits - sole traders and partnerships

Expenditure incurred:

Annual limit

£
From 1 January 2016 to 31 December 2018 200,000
From 1 January 2019 1,000,000

Other plant and machinery allowances

  • Expenditure upon which AIA is not given/claimed will obtain relief through the ' main rate pool ' or the ' special rate pool ' rather than each item being dealt with separately.
  • The annual rate of WDA is 18% in the 'main rate pool' and 8% in the 'special rate pool'.
  • A 100% first year allowance (FYA) may be available on certain energy efficient plant and cars.

Cars

  • For expenditure incurred on cars, costs are generally allocated to one of the two plant and machinery pools.
  • AIA is not available on any car but a 100% first year allowance may be available on certain cars. To qualify for first year allowance, the car must be purchased new.
  • The government has announced that for expenditure incurred on cars on or after 1 April 2018 the emissions limits for the main rate and FYA are reduced to 110 and 50 g/km respectively.

Cars acquired from April 2018

Emissions (g/km)

Pool

Allowance

≤50 Main rate 100% FYA
≤ 110 Main rate 18% WDA
>110 Special rate 8% WDA

 

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As long as we are in business, we shall continue to use Sence accounting.

Lucy Jackson
Lucy and Nicky Jackson

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