Main capital allowances
Assets will be dealt with either in a main rate pool, a special-rate pool or a single-asset pool.
|Main-rate pool (plant and machinery and cars emitting not more than 50g/km C02):||18%|
|New expenditure up to £1m (not cars) - applies from 1 January 2019 to 31 December 2021. From 1 January 2022, this will revert to £200,000.||100%||2|
|Unrelieved expenditure brought forward: writing-down allowance||18%|
|Super-deduction- applies from 1 April 2021 to 31 March 2023 to companies investing in qualifying plant and machinery||130%|
|Special-rate pool (long-life assets, integral features and cars emitting more than 50g/km C02):||6%||7|
|Unrelieved expenditure brought forward: writing-down allowance||6%|
|Enterprise zones - detailed restrictions apply||100%||6|
|Energy-efficient and environmentally-beneficial technologies (ECA)||100%||4|
|Acquisition or installation of new and used electric vehicle charge points||100%|
|New and unused cars emitting less than 50g/km CO2||100%||5|
|Writing-down allowance: cars|
|51g/km - 110g/km||18%|
|Structures and buildings (straight line)||3%|
|Commercial/industrial buildings in an enterprise zone (EZA)||100% of building cost|
|Research and Development (R&D) relief for SMEs||230%|
|SME cash credit for R&D loss surrendered||14.5%|
|Research and Development (R&D) relief for non-SMEs||13%|
- Capital allowances allow the cost of capital assets to be written off against taxable profits. They replace the charge for depreciation in the business accounts, which is not allowable for tax relief.
- Where a business has a chargeable period of less or more than a year the maximum allowance is reduced or increased pro-rata respectively.
- When the value of the main and special-rate pools before writing-down allowance is given are less than £1,000 they may be fully written off.
- A loss attributable to the enhanced capital allowance on ECA's may be surrendered for a cash payment of two thirds of the corporation tax rate of the loss surrendered (RB12.67% in 2020/21), but limited to the greater of the company's PAYE and NIC liabilities for the period or £250,000.
- The capital allowance treatment of business cars is: Expenditure on cars with CO2 emissions above 110 g/km are included in the special-rate pool and attract an 6% writing-down allowance (WDA) and expenditure on cars with CO2 emissions of 51 - 110g/km attract a 18% wda as part of the main pool. Cars with private use remain in single-asset pools subject to the appropriate rate of WDA according to their emissions. New and unused cars with emissions of no more than 50g/km attract 100% first-year allowances.
- This rate applies to enterprise zones and lasts for 20 years from designation. Enhanced capital allowances will also be available for some new enterprise zones.
- The new structures and buildings allowance applies to the qualifying expenditure on the construction of structures and buildings used in a qualifying business in respect of contracts placed on or after 29 October 2019. No allowance is available on the cost of the land, or on buildings in residential use.
- The new structures and buildings allowance applies to the qualifying expenditure on the construction of structures and buildings used in a qualifying business in respect of contracts placed on or after 29 October 2018. No allowance is available on the cost of the land, or on buildings in residential use.
Enhanced capital allowances (ECAs) in Enterprise Zones
100% capital allowances are available on plant and machinery investment made in designated enterprise zones. These allowances are available, but there are some restrictions on which businesses may claim them, to ensure that the allowance is targeted at new economic activity for which new additional plant and machinery is purchased.