Plant and machinery allowances—types and rates
Produced in partnership with Martin Wilson
Plant and machinery allowances—types and rates

The following Tax practice note Produced in partnership with Martin Wilson provides comprehensive and up to date legal information covering:

  • Plant and machinery allowances—types and rates
  • Types of plant and machinery allowance
  • Annual investment allowance
  • Qualifying expenditure
  • Assets not qualifying for the AIA
  • Timing of AIA claim
  • Anti-avoidance
  • Planning point
  • Enhanced capital allowances
  • Qualifying expenditure
  • More...

Capital allowances are the means by which a taxpayer can obtain a deduction when calculating taxable profits for some, but not all, forms of capital expenditure. Generally the deduction is not for the whole of the expenditure at once, but is spread over a number of years. For the meaning of capital expenditure, see Practice Note: What are capital allowances and capital expenditure?

The most common form of capital allowance is that for plant and machinery. This Practice Note looks at the different types and rates of plant and machinery allowance, and the ways in which the tax relief is given.

For details of what expenditure qualifies for allowances, together with an explanation of balancing allowances and charges, writing-down allowances, final chargeable period, and disposal proceeds, see Practice Notes: How plant and machinery allowances are claimed—income tax and How plant and machinery allowances are claimed—corporation tax.

There are special rules for oil and gas companies, for which see Practice Note: Oil and gas—corporation tax and the supplementary charge—Capital allowances.

Types of plant and machinery allowance

A number of different types of plant and machinery allowances are available, depending on the type of expenditure incurred and the person incurring it (ie non-corporate or corporate). The following list is presented in the order which the taxpayer should generally seek to claim the tax relief (ie the greatest reliefs first):

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