Capital Allowances

Plant and machinery

	Allowance 2010/11
Main rate pool: - expenditure up to £100,000 (2009/10 - £50,000) - First Year - expenditure over £100,000 (2009/10 - £50,000) - subsequent years writing down allowance	100% (1) 20% (2009/10 - 40%) 20%
Special rate pool (long life assets, integral features): - expenditure up to £100,000 (2009/10 - £50,000) - First Year - expenditure over £100,000 (2009/10 - £50,000) - First Year - subsequent writing down allowance	100% (1) 10% 10%
Energy saving plant and machinery	100% (2)

 

Motor Cars

	Allowance 2010/11
New cars until 31st March 2013 with CO2 emission not exceeding 110gm/km	100%(3)
Cars with C02 emission over 160gm/km - writing down allowance	10% (3)
Cars with C02 emission of 160gm/km or less (added to main plant pool) - writing down allowance	20% (3)
Cars acquired prior to April 2009 - writing down allowance	20% - max £3,000 (3)

 

Research & development

	Allowance 2010/11
Large Companies	130%
SME's	175%
Industrial buildings	1% straight line (4) 2009/10 - 2%
Agricultural buildings	1% straight line (4) 2009/10 - 2%
Intangible assets for companies	Amortisation per accounts or 4%
Enterprise Zone allowances for commercial premises	100% (4)
Disadvantaged Areas Business Premises Renovation allowance	100%

 

Capital allowances write off the cost of capital assets against taxable profits. They are used instead of the depreciation in the accounts, which is not allowable as a tax deduction.

(1) For accounting periods shorter or longer than 1 year the £100,000 limit is pro-rata. There is a single £100,000 AIA limit for groups of companies and there is "anti-fragmentation" rules for "related" companies and businesses under common control. The AIA limit can be allocated between companies as they wish.

(2) Companies that make losses attributable to 100% first year allowances on designated energy saving or environmentally beneficial plant and machinery can surrender the loss in exchange for the first year tax credit equal to 19% of the loss surrendered subject to a maximum of the greater of £250,000 or the company's total PAYE and NIC liability for the period concerned.

(3) The distinction between cars that cost more and less than £12,000 ended on 1 April 2009 for companies and 6 April 2009 for unincorporated businesses. From this date cars will be put into one of two general plant pools, those over 160g/km added to a special rate 10% pool and those at or below 160gm/km will go into the main plant pool. Cars with private usage will still be held in individual pools but the rate determined by these criteria. For expenditure on cars before April 2009, there is a 5 year transitional period where they will continue to be subject to the existing expensive car rules. Prior to these dates there was a 20% writing down allowance subject to a maximum of £3000p.a.

(4) Enterprise zone, Industrial buildings and Agricultural buildings allowances all come to an end of the current tax year.

(5) From 1 April 2010 for Companies and 6 April 2010 for unincorporated businesses a 100% First Year Allowance is available on new and unused zero-emission goods vehicles.