First year allowances

By Tolley

The following Corporation Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

First year allowances
Energy-saving plant or machinery
Environmentally beneficial plant or machinery
First year tax credits
Gas refuelling station
Low emission cars
Zero-emission goods vehicles
Electric vehicle charging points
New assets in designated assisted areas (within enterprise zones)

There are changes included in Finance Act 2019 that affect first year allowances (FYAs). This includes the end of FYAs for items on the Energy Technology List and the Water Technology List from April 2020. However, FYAs on electric vehicle charge points will be available until April 2023.

All measures were announced at Budget 2018 on 29 October 2018. See Budget 2018 ― corporate tax overview for more information.

Energy-saving plant or machinery

A first year plant and machinery allowance is available at a rate of 100% for expenditure on qualifying ‘energy-saving plant or machinery’.

CAA 2001, ss 45A–45C; SI 2018/268 (subscription sensitive)

Qualifying expenditure was originally defined via the Capital Allowances (Energy-saving Plant and Machinery) Order, SI 2001/2541 (subscription sensitive) and amended annually. The Capital Allowances (Energy-saving Plant and Machinery) Order 2018, SI 2018/268 replaced the original Order and all its subsequent amendments with effect from 22 March 2018. This in turn has most recently been updated by the Capital Allowances (Energy-saving Plant and Machinery) Order 2019, SI 2019/501 (subscription sensitive) to ensure that the most recent lists of qualifying technology, the Energy Technology Criteria List February 2019 and Energy Technology Product List February 2019, are used for expenditure incurred on or after 29 March 2019.

A repayable credit is available to companies, but not individuals, in certain circumstances (see below).

FYAs for energy-saving plant or machinery will be abolished with effect from 1 April 2020 for corporation tax and 6 April 2020 for income tax.

FA 2019, s 33

Qualifying energy-saving plant / machinery

To qualify, the asset acquired must: