Capital allowances should be considered in business planning when an existing business has plant and machinery or other assets.

Capital allowances main rates

(see the left-hand menu for detailed guidance on Capital allowances)

Type	2020/21	2019/20	2017/18 to 2018/19	2015/16 to 2016/17	2014/15	2013/14	2012/13 to 2014/15
Enhanced capital allowances (ECA) (energy-saving and environmentally beneficial plant and machinery)	Withdrawn except in respect of Enterprise Zones	100%	100%	100%	100%	100%	100%
First Year Allowance: Electric car charging points	100%	100%	100%	100% from 23 November 2016
Enterprise Zone Limit	100% €125 million	100% €125 million	100% €125 million	100% €125 million	100% €125 million	100% €125 million	100% €125 million
Business Property Renovation	- (withdrawn from April 2017)	- (withdrawn from April 2017)	- (withdrawn from April 2017)	100%	100%	100%	100%
Flat Conversion Allowance	-	-	-	-	-	-	100%
Landlord's Energy Savings Allowance	-	-	-	-	£1,500	£1,500	£1,500
Annual investment allowance (AIA)	100%	100%	100%	100%	100%	100%	100%
AIA annual limit	From 1/6-April-12 £25,000 From 1-Jan-13 £250,000 From 1/6-April-14 £500,000 From 1-Jan-16 £200,000 From 1-Jan-19 £1,000,000 From 1-Jan-22 £200,000 *
First-year allowance (FYA) for expenditure not covered by ECA or AIA	-	-	-	-	-	-	-
Writing-down allowance (WDA) - general pool	18%	18%	18%	18%	18%	18%	18%
WDA - integral features and Long life assets	6%	6%	8%	8%	8%	8%	8%
Small pool write off, written-down balance in either or both WDA pool(s) is £1,000 or less	100%	100%	100%	100%	100%	100%	100%
Structures and buildings allowance	3% straight line	2% straight line	From 29/10/18 2% straight line	-	-	-	-

*The £1 million limit has been extended from 31 December 2020 to 31 December 2021 due to the pandemic. It is likely that from 1 January 2022 the AIA limit will revert back to £200,000 being the ‘permanent limit’. The permanent limit was introduced to end the regular changes and transitional arrangements. 

Motor cars 

Cars purchased between from 1 April 2018/ 5 April 2018 if a sole trader or partnership	2018/19 to 2020/21	2021/22  to 2024/25
Type	Rate	Rate
FYA for electric cars or zero emission	100%	100%
FYA if CO2 emissions are 50g/km or lower	100%	n/a
WDA if CO2 emissions are 50g/km or lower (not zero)	n/a	18%
WDA if CO2 emissions are between 50g/km and 110g/km	18%	6%
WDA (second-hand vehicles) if CO2 emissions are less than 110g/km	18%	6%
WDA if CO2 emissions exceed 110g/km	6%	6%

Motor cars 

Purchased between April 2015 and April 2018	2015/16 to 2017/18	2013/14 to 2014/15	2012/13	To 2011/12
Type	Rate	Rate	Rate	Rate
FYA for electric cars or if CO2 emissions are 75g/km or lower	100%
FYA for electric cars or if CO2 emissions are 95g/km or lower		100%
FYA for electric cars or if CO2 emissions are 110g/km or lower			100%	100%
WDA (second-hand vehicles) if CO2 emissions do not exceed 130g/km	18%	18%
WDA (second-hand vehicles) if CO2 emissions do not exceed 160g/km			18%	20%
WDA if CO2 emissions exceed 75g/km but do not exceed 130g/km	18%
WDA if CO2 emissions exceed 95g/km but do not exceed 130g/km		18%
WDA if CO2 emissions exceed 110g/km but do not exceed 160g/km		-	18%	20%
WDA if CO2 emissions exceed 130g/km	8%	8%	-	-
WDA if CO2 emissions exceed 160g/km		-	8%	10%

Finance Act 2020 

• Included changes to the Structures and buildings allowance.
• It appears that policy proposals originally published with Finance Bill 2020 have been postponed. It was expected that that from April 2021 the CO2 thresholds were to be reduced and FYA extended. The following measures have not been legislated:
  • The 100% FYA will be extended to apply to zero-emission cars, for four years from 1 April/6 April 2021.
  • The 18% rate will apply to cars with CO2 between 1 and 50g/km.
  • The 6% will apply to cars with CO2 emissions above 50g/km.
  • First-year allowances for zero-emission goods vehicles and gas refuelling equipment are extended from 1 April 2018 to March/April 2021.
• From 1 April 2020 the 100% allowance for ECAs in Enterprise Zones remains available for expenditure incurred in relation to all designated assisted areas, whenever designated, until at least 31 March 2021.
• HMRC's Agent Update 81 (December 2020) has confirmed that these changes will be introduced from April 2021.
• The government has extended the AIA of £1 million for another year until 31 December 2021.

Finance Act 2019

From 1/6 April 2019:

• Reduce the WDA rate for the special rate pool from 8% to 6%.
• Extend the FYA for electric charge points until 31 March 2023.

From 1/6 April 2020:

• End ECAs from 1 April 2020 for companies and 6 April 2020 for unincorporated businesses.

From 1 January 2019:

• Temporarily increase the AIA to £1million for two years from 1 January 2019.

From 29 October 2018:

• Introduced a new Structures and Buildings Allowance for qualifying expenditure incurred on or after 29 October 2018. This will be at an annual rate of 2% on a straight-line basis with no balancing adjustments on disposal.
• Restrict expenditure on altering land for the installation of plant and machinery to where the plant and machinery itself qualify for allowances.