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 (‘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.
• 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

AIA limits – sole traders and partnerships

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‘.
• A 100% first year allowance (FYA) may be available on certain energy efficient plant and cars.

Other allowances

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 2021

• 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.
• 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

AIA limits – sole traders and partnerships

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‘.
• 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