Date of publication: November 2018
The Capital Expenditure of a business is not deducted when arriving at the taxable profit. Instead allowances are given against tax, based upon date of expenditure as follows:
100% relief for capital expenditure – subject to certain exclusions, notably cars (see below).
Amount is pro-rated for long or short accounting period.
It is provided on a group wide basis, so groups of companies have to decide upon the allocation of the allowance between their members.
In addition to the AIA 100% relief is available on the following capital expenditure:
The specified plant and machinery is detailed on lists produced by the government.
Standard Rate 18%
Special Rate 8%
Writing down Allowances are given on a reducing balance basis. The Special Rate applies to Integral Features (see below), long-life assets, thermal insulation and, from April 2009, higher emission cars (see below). The Standard Rate applies to everything else.
Integral features are:
Rather than treating an asset as part of a general pool, assets with an expected life of under 8 years can be recorded and receive tax relief on an individual basis, relief will be accelerated when they are disposed of or scrapped. An election in writing is required to take advantage of this accelerated relief.
Emissions above 130g/km
Emissions between 75g/km and 130g/km
Emissions of 75g/km or below
Cars with emissions of 130g/km or higher are held in a special pool of assets and any balancing charges or allowances are claimed on disposal.
Disclaimer: This note does not contain a full statement of the law and it does not constitute legal advice. Please contact us if you have any questions about the information set out above.
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