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.
-
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% 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 March 2023
|
1,000,000
|
|
From 1 April 2023
|
200,000
|
AIA limits - sole traders and partnerships
Expenditure incurred:
|
Annual limit
|
|
|
£
|
|
From 1 January 2019 to 31 March 2023
|
1,000,000
|
|
From 1 April 2023
|
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 cars.
-
Between 1 April 2021 and 31 March 2023, companies investing in qualifying new plant and machinery will benefit from a new FYA. A company will be allowed to claim a super-deduction of 130% on certain new plant and machinery investments that ordinarily qualify for the 18% WDA and a 50% FYA on most new plant and machinery investments that ordinarily qualify for the 6% WDA.
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% FYA may be available on certain cars. To qualify for FYA, the car must be purchased new.
Cars acquired from April 2021
Emissions (g/km)
|
Pool
|
Allowance
|
|
0
|
Main rate
|
100% FYA
|
|
≤ 50
|
Main rate
|
18% WDA
|
|
>50
|
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.
-
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% 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 March 2023
|
1,000,000
|
|
From 1 April 2023
|
200,000
|
AIA limits - sole traders and partnerships
Expenditure incurred:
|
Annual limit
|
|
|
£
|
|
From 1 January 2019 to 31 March 2023
|
1,000,000
|
|
From 1 April 2023
|
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 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% FYA may be available on certain cars. To qualify for FYA, the car must be purchased new.
Cars acquired from April 2021
Emissions (g/km)
|
Pool
|
Allowance
|
|
0
|
Main rate
|
100% FYA
|
|
≤ 50
|
Main rate
|
18% WDA
|
|
>50
|
Special rate
|
6% WDA
|
