Main Capital Allowances

For limited companies subject to corporation tax expenditure is on or after 1 April 2010, for unincorporated businesses expenditure is on or after 6 April 2010.

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 < 160g/km CO2)
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 > 160g/km CO2)
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 & environmentally beneficial technologies (ECA)	100%	4
Motor cars
Cars emitting not more than 110 g/km CO2	100%	5
Cars emitting not more than 160 g/km CO2	20%	5
Cars emitting more than 160 g/km CO2	10%	5
On reducing balance (max £3,000 p.a. per car) (Acquired before April 2009)	20%	5
Research and development relief	130% or 175%	6
Industrial buildings and qualifying hotels (IBA)	1% of building cost	7
Agricultural buildings (ABA)	1% of building cost	7
Commercial/industrial buildings in an enterprise zone (EZA)	100% of building cost	7
Business premises renovation allowance	100%
Flat conversions	100%

Notes

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 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 will be included in the special rate pool and will attract a 10% writing down allowance (wda) and expenditure on cars with CO₂ emissions of 160 g/km or below will attract a 20% wda as part of the main pool. Cars purchased before the date of change will remain within the old rules attracting 20% wda up to a maximum of £3,000 per annum. Cars with private use will remain in single asset pools subject to the appropriate rate of wda according to their emissions.
6. The rate of relief for large companies will increase to 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 to be phased out at the end of the current tax year.