Plant and machinery

• The cost of purchasing capital equipment in a business is not a revenue tax deductible expense. However 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, certain fixtures in a building ('integral
  features'), computers, cars, vans and similar equipment used in a business.

• There are special rules for cars and certain 'environmentally friendly' equipment.

• Plant and machinery allowances may be available to owners of commercial property which is let out to a business.

• The Annual Investment Allowance (AIA) gives a 100% write-off on most types of plant and machinery (but not cars) up to an annual limit.

• Writing down allowances (WDA) are given for expenditure for which AIA is not, or cannot be, claimed

AIA

• Special rules apply to accounting periods straddling the dates in the tables below.

• The AIA may need to be shared between certain businesses under common ownership

AIA limits - companies

Expenditure incurred :  Annual limit
  £
 1 April 2014 to 31 December 2015
 500,000
 From 1 January 2016
 200,000

AIA limits - sole traders and partnerships

Expenditure incurred :
 Annual limit
   £
 6 April 2014 to 31 December 2015
500,000
 From 1 January 2016
 200,000

Other plant and machinery allowances

• Expenditure upon which AIA is not given/claimed will obtain relief through the 'main rate pool' or the 'special rate pool' rather than each
  item being dealt with separately.

• The annual rate of WDA is 18% in the 'main rate pool' and 8% in the 'special rate pool'.

• A 100% first year allowance (FYA) may be available on certain energy efficient plant and cars.

Cars

• For expenditure incurred on cars, costs are generally allocated to one of the two plant and machinery pools.

• AIA is not available on any car but a 100% first year allowance may be available on certain cars. To qualify for first year allowance, the car
  must be purchased new.

• The government has announced that for expenditure incurred on cars on or after 1 April 2018 the emissions limits for the main rate and FYA
  are reduced to 110 and 50 g/km respectively

Cars acquired from April 2015

Emissions (g/km)
 Pool  Allowance
 ≤75  Main rate
100% FYA
≤ 130
 Main rate
18% WDA
>130
Special rate
8% WDA

The 'main rate pool' is one of the two general pools into which plant expenditure is allocated (the other being the 'special rate pool')

The 'special rate pool' is one of the two general pools into which expenditure is allocated (the other being the 'main rate pool').  The main items in the special rate pool are integral features and some higher emission cars

Disclaimer 

This publication is published for the information of clients. It provides only an overview of the regulations in force at the date of publication and no action should be taken without consulting the detailed legislation or seeking professional advice. Therefore no responsibility for loss occasioned by any person acting or refraining from action as a result of the material contained in this publication can be accepted by the authors or the firm.