Capital allowances
Capital allowances give a taxpayer relief for certain types of capital expenditure, as shown in the table below.
Capital allowance rates
The following rates apply from 1 April 2011 for corporation tax and from 6 April 2011 for income tax.
| Capital type | Allowance rate | |
|---|---|---|
| Machinery and plant, normal rate | 20% | Reducing balance |
| Machinery and plant, first year allowance *1 | 100% | New expenditure up to £100,000 |
| Machinery and plant, long life assets *2 | 10% | Reducing balance |
| Motor cars | 20% | Reducing balance (max £3,000 pa) |
| Motor cars (new rules - CO2 >16Og/km) | 10% | |
| Motor cars (new rules - CO2 <16Og/km) | 20% | |
| Low emission and electric cars | 100% | |
| Industrial buildings and qualifying hotels | 1% | Of cost per annum |
| Commercial/industrial buildings in an enterprise zone | 100% | |
| Agricultural buildings | 1% | Of cost per annum |
| Scientific research (large companies) | 130% | |
| Scientific research (small companies) | 175% | |
| Know how | 20% | Reducing balance |
| Patent rights | 20% | Reducing balance |
| Energy efficient & environmentally beneficial technologies | 100% | |
Notes:
*1 Applies to small and medium sized businesses (as defined by the Companies Act). Cars and certain other assets are excluded.
*2 Assets with a working life of 25 years or more unless expenditure on such assets is below £100,000 in the period.
This page was last reviewed on 14 January 2009. The information may not reflect changes in legislation made after this date.
This is only a guide to your tax position and should not be relied on in place of professional accounting or tax advice. Any calculated figures are illustrative and are based on the data you provided.
