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 £100,000 (not cars) 100% 2
Unrelieved expenditure brought forward – writing down allowance 20%
Special rate pool (long life assets, integral features and cars emitting more than 160g/km C02):
New expenditure up to £100,000 (not cars) 100% 2
New expenditure over £100,000 10% 3 & 5
Unrelieved expenditure brought forward – writing down allowance 10%
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) 20% 5
Writing down allowance – cars
111g/km – 160g/km 20%
Over 160g/km 10%
Research and development relief 130% or 175% 6
Industrial buildings and qualifying hotels (IBA) 1% of building cost p.a. 7
Agricultural buildings (ABA) 1% of building cost p.a. 7
Commercial/industrial buildings in an enterprise zone (EZA) 100% of building cost 7
Business premises renovation allowance 100%
Flat conversions 100%
  1. 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.
  2. Where a business has a chargeable period of less than a year the maximum allowance is reduced or increased pro-rata.
  3. 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.
  4. 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
  5. 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 20% wda as part of the main pool. Cars purchased before 6 April 2009 will remain within the old rules attracting 20% 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.
  6. 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 175% for companies claiming enhanced deductions against profits.
  7. IBA and ABA are phased out at the end of the current tax year.

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 £100,000 (not cars) 100% 2
Unrelieved expenditure brought forward – writing down allowance 20%
Special rate pool (long life assets, integral features and cars emitting more than 160g/km C02):
New expenditure up to £100,000 (not cars) 100% 2
New expenditure over £100,000 10% 3 & 5
Unrelieved expenditure brought forward – writing down allowance 10%
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) 20% 5
Writing down allowance – cars
111g/km – 160g/km 20%
Over 160g/km 10%
Research and development relief 130% or 175% 6
Industrial buildings and qualifying hotels (IBA) 1% of building cost p.a. 7
Agricultural buildings (ABA) 1% of building cost p.a. 7
Commercial/industrial buildings in an enterprise zone (EZA) 100% of building cost 7
Business premises renovation allowance 100%
Flat conversions 100%
  1. 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.
  2. Where a business has a chargeable period of less than a year the maximum allowance is reduced or increased pro-rata.
  3. 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.
  4. 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
  5. 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 20% wda as part of the main pool. Cars purchased before 6 April 2009 will remain within the old rules attracting 20% 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.
  6. 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 175% for companies claiming enhanced deductions against profits.
  7. IBA and ABA are phased out at the end of the current tax year.