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Capital allowances

 

Written by Ray Coman

 

 

 

2021-22 2020-21 Note
Plant and machinery  
Annual investment allowance 100% 100%

A

Super-deduction for investing in qualifying plant and machinery 130%    
Long life assets and integral features 6% 6% B
Other assets 18% 18% B
First year allowances 100% 100% C
Cars: CO2 emissions (g/km)      
50 or less  100% 100%  
51 - 110  18% 18% B
Over 110  6% 6% B
Structures and buildings 2% 2% D

A Maximum annual investment allowance £200,000 pa from 1 January 2022 (£1,000,000 pa for the year to 31 December 2021).
B Reducing balance
C Available for: research and development (no time limit); enterprise zone (assisted areas) until designated dates between 31 March 2020 and 16 March 2024; energy saving and environmentally beneficial (water efficient) technologies until 31 March 2020/5 April 2020; brand new low emission cars and gas refuelling stations until 31 March 2021; zero-emission goods vehicles until 31 March 2021/5 April 2021; and electric vehicle charge points until 31 March 2023/5 April 2023.
D Expenditure on non residential structures and buildings on construction contracts entered into on or after 29 October 2018.

Super-deduction and first year allowance

In addition to the annual investment allowance, there will be a super deduction of 130% for qualifying plant and machinery. This will include items such as computer and office furniture. However, it will exclude items such as charter boats and cars.

Certain assets are added to a special pool. The first year allowance on this pool will increase from 6% to 50% with effect from 1 April 2021.

Examples of special rate pool assets include:

  • Feature integral to a building;
  • Cars with higher CO2 emissions; and
  • Assets with a life of over 25 years.

Comments  

#2 Ray Coman, FCCA, 2020-06-26 09:57
Doreen,

I advise that it is possible to claim capital allowance on part of the build cost of a commercial premises. A deduction from profits is allowed for integral features such as: heating, water and electrical systems. A deduction is also allowed for fixtures such as fitted units, security and fire alarm systems. Office furniture are also tax deductible.

Repair costs related to the building could be tax deductible.

It is not possible to deduct the cost of structural work such as foundation, walls, floors, doors, roof and stud work. These costs would be part of the capital costs deducted from any gain exposed to capital gains tax on eventual disposal.

Further information can be found here: https://comanandco.co.uk/use-of-home-as-office
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#1 Doreen Burton 2020-06-17 19:47
My daughter is building an extension on her house, part of which will be used as office space for her self employed business. The builder is not VAT registered. Can she claim any allowance for this on her tax return please.?
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