Capital allowances - plant and machinery
-
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 (''), 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.
-
A Structures and Buildings Allowance of 3% (2% prior to April 2020) may be available for qualifying investments to construct new, or renovate old, non-residential structures and buildings.
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 2019 to 31 December 2020
|
1,000,000
|
|
From 1 January 2021
|
200,000
|
AIA limits - sole traders and partnerships
Expenditure incurred:
|
Annual limit
|
|
|
£
|
|
From 1 January 2019 to 31 December 2020
|
1,000,000
|
|
From 1 January 2021
|
200,000
|
Other plant and machinery allowances
- Expenditure upon which AIA is not given/claimed will obtain relief through the '' or the '' rather than each item being dealt with separately.
- The annual rate of WDA is 18% in the '' and 6% in the ''.
-
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 ('
'), 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 to 31 December 2020
|
1,000,000
|
Other plant and machinery allowances
-
Expenditure upon which AIA is not given/claimed will obtain relief through the '
' or the '
' rather than each item being dealt with separately.
- The annual rate of WDA is 18% in the '' and 6% in the ''. 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
|
