- 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
Annual limit |
|---|
| £ |
| 1,000,000 |
AIA limits - sole traders and partnerships
Annual limit |
|---|
| £ |
| 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'.
- A 100% first year allowance (FYA) may be available on certain energy efficient plant and cars.
Other allowances
|
First Year Allowance (FYA) on certain plant, machinery and cars of 0g/km (for cars purchased before 1 April 2025) |
100% |
|
Corporation tax FYA (‘full expensing’) on certain new, unused plant and machinery from 1 April 2023 |
100% |
|
Corporation tax FYA on new, unused long-life assets, integral features of buildings, etc. from 1 April 2023 |
50% |
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
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 (' 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
Annual limit
£ 1,000,000 AIA limits - sole traders and partnerships
Annual limit
£ 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 '.
- A 100% first year allowance (FYA) may be available on certain energy efficient plant and cars.
Other allowances
Corporation tax super-deduction on certain plant and machinery until 31 March 2023
130%
First Year Allowance (FYA) on certain plant, machinery and cars of 0 g/km
100%
Corporation tax FYA on long-life assets, integral features of buildings, etc. until 31 March 2023
50%
Corporation tax FYA (‘full expensing’) on certain new, unused plant and machinery from 1 April 2023
100%
Corporation tax FYA on new, unused long-life assets, integral features of buildings, etc. from 1 April 2023
50%
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
Emissions (g/km)
Pool
Allowance
0 Main rate 100% FYA ≤ 50 Main rate 18% WDA >50 Special rate 6% WDA