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 110g/km C02):    
New expenditure up to £200,000 (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 110g/km C02):    
New expenditure up to £200,000 (not cars) 100% 2
Unrelieved expenditure brought forward - writing down allowance 8%  
Enterprise zones - detailed restrictions apply  100%  
Energy efficient and environmentally beneficial technologies (ECA) 100% 4
Acquisition of new and used electric charge points 100% 
Motor cars    
Brand new cars emitting not more than 50g/km CO2 100%  5
Acquired before April 2009: transferred into the pool  5
Writing down allowance - cars    
51g/km - 110g/km 18%  
Over 110g/km 8%  
Research and Development (R&D) relief for SMEs 230% 6
SME cash credit for R&D loss surrendered 14.5%  
Research and Development (R&D) relief for non-SMEs 12% &
Commercial/industrial buildings in an enterprise zone (EZA) 100% of building cost 7
  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 or more than a year the maximum allowance is reduced or increased pro-rata respectively.
  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 two thirds of the corporation tax rate of the loss surrendered (12.67% in 2018/19), but limited to the greater of the company's 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 110g/km are included in the special rate pool and attract an 8% writing down allowance (wda) and expenditure on cars with CO2 emissions of 110g/km or below attract a 18% wda as part of the main pool. Cars with private use remain in single asset pools subject to the appropriate rate of wda according to their emissions. Cars purchased before 1 April 2018 are allocated to the main or special rate pool based on emissions below or above 130g/km respectively. New cars with emissions of no more than 50g/km (75g before 1 April 2018) attract 100% first year allowances.
  6. This rate applies to enterprise zones and lasts for 20 years from designation. Enhanced capital allowances will also be available for some new enterprise zones.
  7. Expenditure on the acquisition of new and unused electric charge point equipment will benefit from a 100% first year allowance. This is available for all expenditure up to 31 March 2019 for corporation tax and 5 April 2019 for income tax purposes. 
  8. Some of the more unusual areas in which capital allowances can be claimed include: heating installations; electrical installations, water installations, fixed internal fittings, (e.g. sanitary fittings, kitchens, carpets), air conditioning - note that environmentally friendly systems can attract 100% enhanced capital allowances, and communication installations e.g. fire alarms, nurse call systems, IT data points.

Enhanced capital allowances (ECAs) in Enterprise Zones

100% capital allowances are 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, Humber and Deeside in North Wales. These allowances are available, but there are some restrictions on which businesses may claim them, to ensure that the allowance is targeted at new economic activity for which new additional plant and machinery is purchased.

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