Main capital allowances
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 and cars emitting not more than 160g/km C02): | ||
| New expenditure up to £25,000 (not cars) | 100% | 2 |
| Unrelieved expenditure brought forward - writing down allowance | 18% | |
| Special rate pool (long life assets, integral features and cars emitting more than 160g/km C02): | ||
| New expenditure up to £25,000 (not cars) | 100% | 2 |
| New expenditure over £25,000 | 8% | 3 & 5 |
| Unrelieved expenditure brought forward - writing down allowance | 8% | |
| Enterprise zones | 100% | |
| Energy efficient and environmentally beneficial technologies (ECA) | 100% | 4 |
| Motor cars | ||
| New cars emitting not more than 110 g/km CO2 | 100% | 5 |
| Acquired before April 2009: On reducing balance (max £3,000 p.a. per car) | 18% | 5 |
| Writing down allowance - cars | ||
| 111g/km - 160g/km | 18% | |
| Over 160g/km | 8% | |
| Research and development relief | 130% or 225% | 6 |
| Commercial/industrial buildings in an enterprise zone (EZA) | 100% of building cost | 7 |
| Business premises renovation allowance | 100% | |
| Flat conversions | 100% |
- 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.
- Where a business has a chargeable period of less than a year the maximum allowance is reduced or increased pro-rata.
- When the value of the main and special pools before writing down allowance is given are less than £1,000 they may be fully written off.
- 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
- The capital allowance treatment of business cars is: Expenditure on cars with CO2 emissions above 160 g/km are included in the special rate pool and attract a 10% writing down allowance (wda) and expenditure on cars with CO2 emissions of 160 g/km or below attract a 18% wda as part of the main pool. Cars purchased before 6 April 2009 will remain within the old rules attracting 18% wda up to a maximum of £3,000 per annum. Cars with private use remain in single asset pools subject to the appropriate rate of wda according to their emissions.
- The rate of relief for large companies is 130% of qualifying R&D expenditure. In the case of SME R&D tax credit scheme, the rate of relief will increase to 225% for companies claiming enhanced deductions against profits.
- This rate applies to enterprise zones designated to October 1996 and lasts for 20 years from designation. Enhanced capital allowances will also be available for some new enterprise zones.
2013 and beyond
Business cars
From April 2013 the 100% FYA for businesses purchasing low emission cars will be extended for a further two years to 31 March 2015. The carbon emission threshold below which cars are eligible for the FYA will also be reduced from 110g/km to 95g/km.
Businesses cars main rate
From April 2013, the carbon dioxide emissions threshold for the main rate of capital allowances of 18 per cent for business cars will reduce from 160 g/km to 130 g/km. This will also be the new threshold above which the lease rental restriction applies.
Enhanced capital allowances (ECAs) in Enterprise Zones
100% capital allowances will be available on plant and machinery investment made in designated areas of the London Royal Docks Enterprise Zone, three Scottish Enterprise Zones in Irvine, Nigg and Dundee, and Deeside in North Wales. This follows announcements regarding ECA's in English Enterprise Zones in 2011, and the additional zone in Humber announced in February 2012. These allowances will be available from 1 April 2012.
