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Online Resources > Tax Rates & Allowances >
Capital Allowances
For limited companies from 1st April 2008 and unincorporated businesses from 6th April 2008.
Allowance |
|
Plant and machinery | |
|---|---|
General pool: - expenditure up to £50,000 - First Year - expenditure over £50,000 - First Year - subsequent writing down allowance | 100% (1) 20% 20% (2)(3) |
Special rate pool (long life assets, integral features): - expenditure up to £50,000 - First Year - expenditure over £50,000 - First Year - subsequent writing down allowance | 100% (1) 10% 10% (2)(3) |
Energy saving plant and machinery | 100% (4) |
Motor cars | |
New cars until 31st March 2013 with CO2 emission not exceeding 110gm/km | 100% |
Other cars writing down allowance | 20% - max £3,000 p.a - (5) |
Research & development | |
Large Companies | 130% |
SME's | 175% |
Industrial buildings | 3% straight line (6) |
Agricultural buildings | 3% straight line (6) |
Intangible assets for companies | Amortisation per accounts or 4% |
Enterprise Zone allowances for commercial premises | 100% |
Disadvantaged Areas Business Premises Renovation allowance | 100% |
Capital allowances write off the cost of capital assets against taxable profits. They are used instead of the depreciation in the accounts, which is not allowable as a tax deduction.
(1) For accounting periods shorter or longer than 1 year the £50,000 limit is pro-rata. There is a single £50,000 AIA limit for groups of companies and there is "anti-fragmentation" rules for "related" companies and businesses under common control. The AIA limit can be allocated between companies as they wish.
(2) There are transitional premiums for a "hybrid rate" where the accounting period spans the commencement date for the new regime.
(3) Historic WDA plant and machinery pools can claim a WDA of up to £1,000 where the pool is £1,000 or less.
(4) Companies that make losses attributable to 100% first year allowances on designated energy saving or environmentally beneficial plant and machinery can surrender the loss in exchange for the first year tax credit equal to 19% of the loss surrendered subject to a maximum of the greater of £250,000 or the company's total PAYE and NIC liability for the period concerned.
(5) Reducing to 10% in 2008/09 for cars with CO2 emission above 160mg/km.
(6) Industrial buildings and Agricultural buildings allowances are being phased out by 2010/11.
Previous Capital Allowances for 2007/08
Writing Down Allowance | First Year Allowance | |
Plant and machinery | 25% reducing balance | See note below |
|---|---|---|
Long Life Assets* | 6% | 6% |
Designated energy saving plant and machinery | N/A | 100% |
Motor cars | 25% reducing balance (£3000 max) | 100% on new cars with CO2 emission not exceeding 120gm/km |
Industrial buildings | 4% straight line | |
Agricultural buildings | 4% straight line | |
Research & Development | N/A | 130% for large companies 175% for SME's |
Disadvantaged areas business premises renovation allowance | N/A | 100% (from 11/4/07) |
* Long Life Assets apply to some businesses spending more than £100,000 p.a. on certain assets with a useful life of 25 years or more.
Plant and machinery FYA
For small businesses: FYA of 50% is available (to 31/3/08 for companies). A small firm is defined as a business that satisfies any two of the following conditions: (a) turnover £5,600,000 or less (b) assets £2,800,000 or less (c) not more than 50 employees.
For medium-sized businesses: FYA of 40%. A medium firm is defined as a business that satisfies any two of the following conditions: (a) turnover £22,800,000 or less (b) assets £11,400,000 or less (c) not more than 250 employees.