This is a freeview 'At a glance' guide to capital allowances: rates and allowances. 

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

2021/22

2020/21

2019/20

2017/18 to 2018/19

2015/16 to 2016/17 

Super-deduction *

130%/50%/100%

- - - -

Annual investment allowance (AIA) 

Limit:

100%

£1 million 

From 1 Jan 22:£200,000

100%
£1 million

 

100%
£1 million

 

100%£200,000

 

 100%
2015/16:£500,000
2016/17:£200,000

Writing-down allowance (WDA) - general pool

18%

18%

18%

18%

 18%

WDA - Integral features and Long life assets

6%

6%

6%

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%

First Year Allowance: Electric car charging points

100%

100%

100%

100%

100% from 23 November 2016

Structures and buildings allowance

3% straight line

3% straight line

2% straight line

From 29/10/18 2% straight line

-

Freeports (new designated sites):

ECAs on p&m
SBAs


100%
10%

- - - -

Enterprise Zone

Limit

100%

€125 million

100%

€125 million

100%

€125 million

100%

€125 million

100%

€125 million

Enhanced capital allowances (ECA) (energy-saving and environmentally beneficial plant and machinery)

-100% ECAs in Enterprise Zones until 31/3/21 at least.

Withdrawn except in respect of Enterprise Zones

100%

100%

100%

Business Property Renovation

-

-

(withdrawn from April 2017)

 100%


* The super-deduction is available at a rate of 130% for main rate assets, 50% for special rate assets and 100% for assets used partly for ring-fenced trades and partly for qualifying trades (on apportionment). The enhanced deduction is available for qualifying expenditure incurred between 1 April 2021 and 31 March 2023.

 

Motor cars 

Cars purchased from 1 April 2018/ 5 April 2018 

(include lcars used by sole traders or partnerships with private use in a single asset pool)

2021/22 
to
2024/25

2018/19
to
2020/21

Type

Rate

Rate

FYA for electric cars or zero emission

100%

100%
FYA if CO2 emissions are 50g/km or lower

n/a

100%
WDA if CO2 emissions are 50g/km or lower (not zero)

18%

n/a

WDA if CO2 emissions are between 50g/km and 110g/km

6%

18%

WDA (second-hand vehicles) if CO2 emissions are less than 110g/km

6%

18%

WDA if CO2 emissions exceed 110g/km

6%

6%


Motor cars 

 Purchased between April 2015 and April 2018

2015/16 to 2017/18 

Type

 Rate

FYA for electric cars or if CO2 emissions are 75g/km or lower

100%

WDA (second-hand vehicles) if CO2 emissions do not exceed 130g/km

18%

WDA if CO2 emissions exceed 75g/km but do not exceed 130g/km

18%

WDA if CO2 emissions exceed 130g/km

8% 

 

Finance Act 2021

  • In an attempt to kick-start the economy post-Covid, the government has announced a new Super Deduction allowance for plant & machinery. New qualifying expenditure, incurred between 1 April 2021 and 31 March 2023, will receive an enhanced 130% first year allowance. See Super-deduction & First Year Allowances
  • Finance Act 2021 introduces a short-term measure to prevent leases, where extended due to Covid-19, from inadvertently becoming long funding leases and falling foul of the anti-avoidances measures included in the Capital Allowances Act 2001. 
  • See: Plant & Machinery: Allowances
  • A 100% enhanced capital allowance for Freeports is to be introduced, as well as a 10% structural buildings allowance. These coincide with the announcement of the eight new Freeport sites across England (and potentially further sites across the rest of the UK). See Freeports: tax breaks.


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.

 


Squirrel ad

 

Are you enjoying our content?

Thousands of accountants and advisers and their clients use www.rossmartin.co.uk as their primary TAX resource.

Register with us now to receive our unique FREE Tax Planning Tips and Advice Guide & our FREE OMB Newsletter.

 

 

Comments (1)

Rated 0 out of 5 based on 0 voters
This comment was minimized by the moderator on the site

is it confirmed that the ECA was withdrawn in April? What tax treatment would a Tesla electric vehicle get now?

Guest
There are no comments posted here yet

Leave your comments

  1. Posting comment as a guest.
Rate this post:
Attachments (0 / 3)
Share Your Location

 

Enjoying our content? 

Sign up now to receive our unique FREE Tax Planning Tips and Advice Guide & our FREE Newsletter.

.Squirrel ad