Tax relief is available on certain capital expenditure in the form of capital allowances.
Plant and machinery allowances may be available on items such as machines, equipment, furniture, computers, some building fixtures and similar equipment. Allowances may be available to owners of commercial property which is let out to a business.
There are special rules for cars and certain ‘environmentally friendly’ equipment.
The Annual Investment Allowances (AIA) give a 100% write-off on most types of plant and machinery not including cars, up to an annual limit. Writing down allowances (WDA) are given for expenditure for which AIA is not, or cannot be claimed.
Annual Investment Allowances
Company limits
| Expenditure incurred | Annual limit (£) |
|---|---|
| From 1st January 2016 | 200,000 |
Sole trader and partnership limits
| Expenditure incurred | Annual limit (£) |
|---|---|
| From 1st January 2016 | 200,000 |
Cars
You can claim capital allowances on cars you buy and use in your business. This means you can deduct part of the value from your profits before you pay tax.
The government has announced that for expenditure incurred on cars on or after 1st April 2018 the emissions limits for the main rate and FYA are reduced to 110 and 50g/km respectively.
Acquired from April 2018
| Emissions (g/km) | Pool | Allowance |
|---|---|---|
| ≤ 50 | Main rate | 100% FYA |
| ≤ 110 | Main rate | 10% WDA |
| >100 | Special rate | 8% WDA |
Acquired from April 2015 to March 2018
| Emissions (g/km) | Pool | Allowance |
|---|---|---|
| ≤ 75 | Main rate | 100% FYA |
| ≤ 130 | Main rate | 10% WDA |
| >130 | Special rate | 8% WDA |