Capital allowances

Based on CO2 emissions

 2016/172017/182018/192019/202020/21
 g/kmg/kmg/kmg/kmg/km
100% First year allowance75 or below75 or below50 or below50 or below50 or below
18% WDA - Main pool76 to 13076 to 13051 to 11051 to 11051 to 110
8% WDA - Special rate poolAbove 130 Above 130 Above 110 Above 110 Above 110
  100% First year allowance 18% WDA - Main pool 8% WDA - Special rate pool
  g/Km g/Km g/Km
2016/17 75 or below 76 to 130 Above 130
2017/18 75 or below 76 to 130 Above 130
2018/19 50 or below 51 to 110 Above 110
2019/20 50 or below 51 to 110 Above 110
2020/21 50 or below 51 to 110 Above 110

For corporation tax purposes the thresholds above apply to cars purchased on or after 1st April whereas for income tax purposes new tax years start on 6th April.

Cars acquired before April 2009 will continue to be treated under the rules prevaliling at the time for a transitional period which ends on the last day of the business' first chargeable period ending on or after 31 March 2014 (for corporation tax) or 5 April 2014 (for income tax). Any remaining balance of unrelieved expenditure after this 5 year period will be added to the main pool.

Capital allowances for vans

A van with zero CO2 emissions is eligible for a 100% first year allowance.

Any other van should be treated as plant and machinery and allocated to the main pool, where it will be eligible for writing down allowances at 18%.

Annual Investment Allowance

In order to stimulate economic growth the maximum amount of the allowance will be increased from £250,000 to £500,000 for qualifying investments made on or after 1 April 2014 to 31 December 2015. From 1 January 2016 the Annual Investment Allowance will drop to £200,000.

Since April 2008 most businesses have been able to claim the annual investment allowance on expenditure on plant and machinery up to a specified amount. Businesses may claim the allowance on both general and special rate plant and machinery. It is effectively a 100% allowance that applies to most qualifying expenditure up to the annual cap, with expenditure on cars being the most important exception. Commercial vehicles, such as vans, qualify for the investment allowance.

Where qualifying expenditure exceeds the annual cap, tax relief will be given under the normal capital allowance regime via the main or special rate pools, with writing down allowances being given at 18% or 8% respectively.

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