Capital Allowances (Plant & Machinery)

Question 1

What are Capital Allowances?

Answer 1

Capital allowances are a form of depreciation allowable for tax purposes.

Question 2

Why Capital allowances?

Answer 2

So every company is treated equally in respect to depreciation.

Question 3

What is classified as Plant & Machinery?

Answer 3

P&M, F&F, Cars, Vans & Lorries, Computer equipment & Software.

Question 4

What are the main types of Capital Allowance?

Answer 4

Wrting Down Allowance (WDA)
Annual Investment Allowance (AIA)
First Yeal Allowance (FYA)

Question 5

Rules of Writing Down Allowance?

Answer 5

18% on most assets

8% on vehicles >130g/km

Question 6

Rules of Annual Investment Allowance?

Answer 6

100% first 500,000 (25,000 from 1/1/2016)
Straddling Year end 1/1/2016
e.g. Year end 31/3/2016
(500,000 * 9/12) Apr-Dec (25,000*3/12) Jan-Mar
Above AIA may be eligible for WDA
Pro rated for short accounting periods
Not available on cars

Question 7

Rules of First Year Allowance?

Answer 7

100% Allowance of cars with emmisions below 75k/gm
100% Energy efficient and water saving technologies.
Qualifies the year the asset is purchased.

Question 8

Treatment of Vans, Lorries and Motorbikes?

Answer 8

AIA in period of purchase, WDA.

Question 9

Treatment of Cars?

Answer 9

76g/km - 130g/km (WDA 18%), >130g/km (WDA 8%)

Second Hand Low emmission classed as 76g/km-130g/km.