Main Capital Allowances
For limited companies subject to corporation tax expenditure is on or after 1 April, for unincorporated businesses expenditure is on or after 6 April.
Assets will be dealt with either in a main rate pool, a special rate pool or a single asset pool.
| |
Allowance | Note |
|---|---|---|
| Main rate pool (plant and machinery) | |
|
| Expenditure up to £100,000 (AIA) |
100% | 2 |
| Expenditure over £100,000 (WDA) |
20% | 3 & 4 |
| Special rate pool (long life assets and integral features & cars over 160g/km) | 10% |
|
| Expenditure up to £50,000 | |
2 |
| Expenditure over £50,000 | |
3 & 4 |
| Energy Saving and Environmentally Benifical Equipment including Lon emission cars. |
100% | 5 |
| Motor cars | |
|
| Cars emitting not more than 110 g/km CO2 New until 31 March 2013 |
100% | |
| On reducing balance (max £3,000 p.a. per car) | 20% | 6 |
| Research and development relief | 130% or 175% | 7 |
| Industrial buildings and qualifying hotels (IBA) | Nil | 8 |
| Agricultural buildings (ABA) | Nil | 8 |
1. 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
2. Where a business has a chargeable period of less than a year the maximum allowance is reduced or increased pro-rata. AIA is reducing to £25,000 from April 2012.
3. Where an accounting period spans the commencement date a pro-rata hybrid rate will be used for the year. WDA is reducing to 18% from April 2012. WDA on the special rate pool is reducing to 8% from April 2012.
4. When the value of the main and special pools are less than £1,000 they may be fully written off.
5. From April 2008 a loss attributable to the enhanced capital allowance on ECA's may be surrendered for a cash payment of 19% of the loss surrendered, but limited to the greater of the companies PAYE and NIC liabilities for the period or £250,000.
6. With effect from 1 April 2009 for corporation tax purposes and 6 April 2009 for income tax the capital allowance treatment of business cars will be reformed. Expenditure on cars with CO2 emissions above 160 g/km will attract a 10% writing down allowance (wda) and expenditure on cars with CO2 emissions of 160 g/km or below will attract a 20% wda.
7. The rate of relief for large companies will increase to 130% of qualifying R&D expenditure. In the case of SME R&D tax credit scheme, the rate of relief will increase to 175% for companies claiming enhanced deductions against profits.
8. IBA and ABA have been phased out from 2011/12.