CAPITAL ALLOWANCES ON PLANT & MACHINERY - ALLOWANCES AND RELIEFS

Financial Yr 2025

1.4.2025 - 31.3.2026

Financial Yr 2024

1.4.2024 - 31.3.2025

Notes

Writing Down Allowance - main rate of expenditure (reducing balance)

18%

18%

Full expensing allows a deduction of 100% or 50% of the cost of NEW qualifying plant and machinery from the profits of companies only from 1.4.2023-31.3.2026.

Annual investment allowance (AIA) - 100%

£1m(max)

£1m(max)

Full expensing - main pool expenditure

100%

100%

Full expensing (special rate pool expenditure)

50%

50%

Super deduction - main pool expenditure

N/a

N/a

First year allowance (special rate pool expenditure)

N/a

N/a

Special WDA - Integral fixtures+ fittings- note 2

6%

6%

Long life assets - note 3

6%

6%

Small Pools Allowance - note 4

Up to £1,000

Up to £1,000

Structures and Buildings Allowance - note 5

3%

3%

Note - for non-limited companies, the allowances and reliefs are given for expenditure in tax years i.e., from 6 April to 5 April. Where the accounting period straddles 1 April or 5 April, a hybrid rate of CA is used.

Note 2 - Integrated fixtures include lifts, escalators, air-conditioning and central heating systems that form part of the building rather than productive equipment

Note 3 - long life assets are assets with a life expectancy of more than 25 years when new such as solar panels and certain items of plant and machinery.

Note 4 - where the balance remaining in the main pool or special asset pool is less than £1,000, the whole of the allowance can be claimed.

Note 5 - From 28.10.18, SBAs at 3%/2% straight line basis is available for qualifying non-residential structures and buildings.

CAPITAL ALLOWANCES ON MOTOR VEHICLES

F Yr 2025

F Yr 2024

Notes

Cars with CO2 emissions - 0 g/km (electric)

100%

100%

FYA of 100% applies on new (not second hand or leased) low emission cars and electric vans. Other vans treated as plant & attract AIA or WDA.

Cars with CO2 emissions - 1- 50 g/km

18%

18%

Cars with CO2 emissions - 51 - 110 g/km

6%

6%

Cars at 18% are included in the main rate pool and WDA given.

Cars at 6% are included in a special rate pool. For sole traders/partners where there is mixed use they are included in a single asset pool.

Cars with CO2 emissions - >110 g/km

6%

6%

A car is regarded as new and unused even if it has been been driven a limited number of miles for the purposes of testing, delivery, test driven by a potential purchaser, or used as a demonstration car.

For sole traders and partnerships, where there is private use, each car forms a special asset pool on its own; allowances are based on CO2 emissions and are given for expenditure in tax years i.e., from 6 April to 5 April . The allowances are restricted for private usage. Further, balancing allowances will be available, or balancing charges will apply, on disposal of the vehicle.

In the case of a special rate pool for a car in a limited company, when a vehicle is disposed off, the sale proceeds are deducted from the pool and no immediate relief is given for any balance of expenditure remaining in the pool (unless the business ceases). Instead, WDA continues to be available at 6% even though a car has been disposed off. Similarly, there is no balancing charge applicable unless the business is ceasing. This is not the case for sole traders and partnerships where balancing allowances and charges will continue to apply.