Capital Allowances

Capital Allowances

Qualifying expenditure is capital expenditure including expenditure on the alteration of land for the purpose only of installing plant or machinery.

Expenditure which does not qualify for allowances

Expenditure on buildings, structures and land, as well as expenditure on certain assets which are incorporated into buildings do not qualify for capital allowances.

Expenditure within the AIA qualifies for 100% allowance in the year of purchase. The AIA cap was increased to £250,000 on 1 January 2013, and is doubled to £500,000 on 1 April 2014 for companies (6 April 2014 for unincorporated businesses).

This increase in the AIA cap will help businesses invest in equipment and fixtures (cars and buildings don’t qualify), with 100% tax relief in the year of purchase. However, great care is needed to calculate the available AIA for accounting periods which straddle the various changes. The AIA cap is due to revert to £200,000 on 1 January 2016.