15-01-2020
What qualifies for First Year Allowances?

Businesses can claim a 100% first-year allowance (FYA) on the purchase of certain qualifying Plant and Machinery (P&M). The cash-flow benefit of accelerated tax relief is designed to encourage businesses to invest in capital items which help reduce their carbon footprint by being energy and water efficient. The list of qualifying items includes expenditure on new unused electric vehicles and other cars within the 50g/km threshold for low CO2 emissions.

The list also includes:

  • energy saving equipment that’s on the energy technology product list, for example certain motors
  • water saving equipment that’s on the water efficient technologies product list, for example meters, efficient toilets and taps
  • plant and machinery for gas refuelling stations, for example storage tanks, pumps
  • gas, biogas and hydrogen refuelling equipment
  • new zero-emission goods vehicles

The use of the FYA allows companies to set the full cost of qualifying P&M against their tax bills in the year of purchase. The FYA is only available on the purchase of new qualifying cars, second-hand cars do not qualify for FYAs (but writing down allowances can be claimed).

If claiming the full amount of FYA would create a loss, it is also possible to claim less than the full 100% FYA and claim the balance using writing down allowances.

Obviously there are a range of non-tax issues that need to be considered if you are advising clients on these issues, prior to investing in new equipment or vehicles. Hopefully, this post will clarify one raft of tax allowances that you could consider.

Source: HM Revenue & Customs | 15-01-2020

Back

Post a Comment

Your email address will not be published. Required fields are marked *

*

  • ABOUT US

    the accountancy practice kent logo

    The Accountancy Practice is a Kent based firm specialising in small and medium sized businesses. We provide a friendly, professional service and regard our smallest client as important as our largest.
  • Latest News

    20-02-2020
    Employer toolkit for EU Settlement Scheme published

    Following Brexit, ... read more

    20-02-2020
    Change to the off-payroll working rules

    As part of a review ... read more

    19-02-2020
    Could you claim the marriage allowance?

    If you are entitled ... read more

    More news

  • CONTACT US

    The Accountancy Practice
    10 Churchill Square
    Kings Hill
    West Malling
    Kent ME 19 4YU

    01732 897929

    Fax: 01732 897939
    info@theaccountancypracticeltd.co.uk


    Facebook
    Twitter
    Linkedin
  • Why choose us

    By working more closely with you than traditional accountants, The Accountancy Practice is able to gain a deeper understanding of your individual business needs. We are then on hand to support you with day to day issues and provide ongoing financial and taxation expertise. You can think of us as your virtual Financial Director.