Capital Allowances

Plant and machinery - Annual Investment Allowance (AIA)

The AIA gives a 100% write-off on most types of plant and machinery costs, including integral features and long life assets but not cars, of up to £50,000 p.a. The limit is increased to £100,000 for expenditure incurred on or after 6 April 2010 (1 April 2010 for companies). Special rules apply for accounting periods straddling these dates. Any costs over the AIA fall into the normal capital allowance pools at either 10% or 20%. The AIA may need to be shared between certain businesses under common ownership.

Other plant and machinery allowances

The annual rate of allowance is 20%. A 10% rate applies to expenditure incurred on integral features and on long life assets. A temporary 40% first year allowance may be due for certain expenditure exceeding the AIA incurred in the 12 month period beginning on 6 April 2009 (1 April 2009 for companies). A 100% first year allowance may still be available on certain energy efficient plant and cars.

Cars For expenditure incurred on cars on or after 6 April 2009 (1 April 2009 for companies), costs are generally allocated to one of the two plant and machinery pools. Cars with CO2 emissions not exceeding 160gm/km receive a 20% allowance p.a. Cars with CO2 emissions over 160gm/km receive a 10% allowance p.a.

Industrial and agricultural buildings and hotels

The annual rate of allowance is 1% (2%) from 6 April 2010 (1 April 2010 for companies). Special rules apply for accounting periods straddling these dates.