Recent news
The Budget of 24 March 2010 announced a number of capital allowances changes.
Annual Investment Allowance (AIA)
- From April 2010 the AIA is increased from £50,000 to £100,000.
- The AIA is available for both general and special rate pool expenditure and applies to individuals (carrying on a qualifying activity), companies and partnerships with only individual partners.
- For accounting periods spanning April 2010, businesses will be entitled to an AIA of between £50,000 and £100,000 (calculated on a pro rata basis).
- Anti-avoidance legislation will also be introduced which can restrict sideways relief for individuals incurring property losses as a result of capital allowance claims from AIA.
100% Enhanced Capital Allowances (ECA)
- The list of qualifying technologies will be revised later in 2010 to include two new sub-technologies – Permanent Magnet Synchronous Motors and Biomass fired warm air heaters.
- The list will also be adjusted with the removal of one existing technology – Compact heat exchangers and one existing sub-technology – Liquid Pressure Amplification.
- Other minor changes will be made to the ECA scheme and the criteria for efficient taps and showers will be tightened.
Zero Emission Goods Vehicles
- From April 2010, expenditure on new and unused zero-emission goods vehicles will attract a 100% FYA.
- The FYA will apply for five years and has an overall expenditure cap of €85m per undertaking over the five year period. Legislation will set out more details regarding the cap.
- The usual restrictions to the availability of FYA apply (e.g. leasing).
- To comply with EU State Aid rules, various other business are also excluded from claiming the FYA including those engaged in fisheries, aquaculture and managing waste for other undertakings (e.g. a waste collector contracting with a local authority to provide an integrated waste management service).
Other issues
- The temporary 40% first year allowance (FYA) for general pool plant and machinery ends on 31 March 2010 for corporation tax and 5 April 2010 for income tax.
- From April 2010, cushion gas is now to be included in the 10% special rate pool. In addition all leases of cushion gas will be categorised as funding leases.
- From April 2010, capital allowances will not be available on Furnished Holiday Lets as they will be treated as dwellings.
(References above to April 2010 mean 1 April 2010 for corporation tax and 6 April 2010 for income tax, unless otherwise stated.)
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