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    Capital Allowances

  • Go to ...
  • annual investment allowance
  • plant & machinery
  • motor cars
  • other asset types
  • intangible assets
  • r&d and other product tax reliefs
  •  


    Annual Investment Allowance (AIA)
      Sole Trader /
    Partnership
    Limited
    Company
    From the 1st January 2016 £200,000 £200,000
    6th April 2014 - 31st December 2015 £500,000 -
    1st April 2014 - 31st December 2015 - £500,000
    1st January 2013 - 5th April 2014 £250,000 -
    1st January 2013 - 31st March 2014 - £250,000
    6th April 2012 - 31st December 2012 £25,000 -
    1st April 2012 - 31st December 2012 - £25,000
    6th April 2010 - 5th April 2012 £100,000 -
    1st April 2010 - 31st March 2012 - £100,000
    6th April 2008 - 5th April 2010 £50,000 -
    1st April 2008 - 31st March 2010 - £50,000

    Notes

    1. You can deduct the full value of an item that qualifies for Annual Investment Allowance from your profits before tax (up to the maximum for the period listed above).
    2. You can claim AIA on most plant and machinery and new and used cars with CO2 emissions not exceeding 50gm/km (2017-18 75gm/km).
    3. You can't claim AIA on:
      • Cars with CO2 emissions in excess of 50gm/km (2017-18 75gm/km)
      • Items you owned for another reason before you started using them in your business
      • Items given to you for your business.
      For these items claim writing-down allowance as appropriate instead.
    4. If your accounting period straddles two AIA rates you use a proportion of both rates to calculate the maximum amount of AIA you can claim.
      For example, your year end is 31.03.16, the amount of AIA is calculated as follows:
      • 3/12 x £200,000 =   £50,000
      • 9/12 x £500,000 = £375,000
      • Total AIA           = £425,000
    5. Assets purchased that allows you to claim first year allowance (first year allowance is the full cost of the asset) are over-and-above your AIA.
    6. 6. Once you have utilised all of your AIA, additional assets go into either the Main Pool or Special Rate Pool / Single Asset Pool (mainly cars with CO2 greater than 110gm/km (2017-18 130gm/km)) and you can claim Reducing Balance writing-down allowances of 18% on the Main Pool and 8% on the Special Pool.

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    Plant and Machinery
      2018-19 2017-18
    Main writing down allowance rate 18% 18%
    Special rate pool (long life assets and integral features within a building) 8% 8%
    Enterprise Zone plant & machinery (max €125m per investment project) 100% 100%
    Patent rights & know-how (annual reducing balance) 25% 25%
    Energy and water-efficient equipment 100% 100%
    Electric vans 100% 100%
    Energy saving / environmentally beneficial assets 100% 100%

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    Motor Cars
      2018-19 2017-18
    New or used cars with CO2 emissions of 50gm/km or less (non-electric) 100% n/a
    New or used cars with CO2 emissions of 75gm/km or less (non-electric) n/a 100%
    New or used cars with CO2 emissions between 50gm/km and 110gm/km 18% n/a
    New or used cars with CO2 emissions between 75gm/km and 130gm/km n/a 18%
    Second hand cars with CO2 emissions of 110gm/km or less or car is electric 18% n/a
    Second hand cars with CO2 emissions of 130gm/km or less or car is electric n/a 18%
    Emissions greater than 110gm/km 8% n/a
    Emissions greater than 130gm/km n/a 8%

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    Other Asset Types
      2018-19 2017-18
    Commercial or Industrial Buildings in an Enterprise Zone 100% 100%
    Business premises Renovation Allowance n/a 100%

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    Intangible Assets

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    Research & Development (R&D) and other product tax reliefs

    R&D and other product tax reliefs
      2018-19 2017-18
    R&D Tax Credits, small & medium sized business (SME) scheme 230.0% 230.0%
    R&D SME Payable Credit 14.5% 14.5%
    R&D SME Expenditure Credit 12.0% 11.0%
    Patent Box 10.0% 10.0%
    Film Tax Relief 25.0% 14.5%
    High-end TV Tax Relief 25.0% 25.0%
    Video Games Tax Relief 25.0% 25.0%
    Open-ended Investment Companies and authorised Unit Trusts 20.0% 20.0%

    Research & Development Relief: Revenue costs

    The meaning of Research & Development (R&D) for these purposes and for the Capital Research & Development Allowance is set out in the BEIS Guidelines issued on 5 March 2004.
    Large Companies (i.e. those that are not SMEs) can make claims under the R&D Expenditure Credits (RDEC) regime. Under this regime, the benefit will be recorded as a taxable credit in operating profit and will be equal to 12% (2017-18 11%) of the qualifying expenditure.
    Non-tax paying large companies can receive a cash payout equal to the net value of the credit, subject to a cap based on the PAYE/NIC paid over to HMRC in respect of staff costs included in the R&D claim, and being a going concern, at the time the claim is made.
    Companies that are SMEs are entitled to an additional deduction of 130% of qualifying R&D expenditure. For non-tax paying SMEs a cash alternative of up to 33.35p for every pound of qualifying expenditure may be available depending on the current year tax losses.
    A cap limits the total amount of SME R&D a company can claim on each project to €7.5million (euro) and a going concern requirement applies.
    An SME for R&D purposes is a company which, together with certain related enterprises, meets the EU definitions but with higher limits such that it has fewer than 500 employees and either turnover not exceeding €100million (euro) or total assets not exceeding €86 million (euro).

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