A reminder of present tax reliefs for capital expenditure

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Here’s a quick summary of the current tax allowances you can claim:

Annual Investment Allowance

The annual investment allowance (AIA) is available to all businesses regardless of size.  This AIA allows businesses to write off 100% of the cost of qualifying plant and machinery. From April 2012 it has been reduced to £25,000. Transitional rules have been put in place for businesses whose accounting periods span the operative date of the decrease.

Writing down allowances

For plant and machinery expenditure that exceeds the AIA and which does not qualify for a first year allowance (see below), a standard 18% writing down allowance (WDA) is available.

First-Year Allowances

Where AIA is not available businesses can claim first-year allowances (FYA) of 100% in the year they purchase certain plant or machinery.  As with the AIA this allows businesses to deduct the whole purchase cost of qualifying assets from their taxable profits. This includes:

  • Low carbon dioxide emission cars.
  • Environmentally beneficial plant and machinery.
  • Renovation of business premises (disadvantaged areas).


A special 100% FYA is available for certain vehicles with low or no carbon dioxide (CO2) emissions.

  • Expenditure on cars with CO2 emissions over 160 grams per kilometre (g/km) driven will be dealt with in a special-rate pool and will attract a writing-down allowance (WDA) of 8% per annum.
  • Expenditure on cars with CO2 emissions of 160g/km driven or less will be dealt with in the main pool and will attract WDA of 18% per annum.

Cars that have an element of non-business use, by the self-employed, must be allocated to a single asset pool to enable the private use adjustment to be made.

If you have any queries regarding capital allowances please do give me a call.

Sue Stephens, Personal Tax Consultant