First year allowances

By Tolley
  • (Updated for Budget 2020)

The following Owner-Managed Businesses guidance note by Tolley provides comprehensive and up to date tax information covering:

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

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, s 39

Qualifying expenditure is defined via the Capital Allowances (Energy-saving Plant and Machinery) Order 2018, SI 2018/268 and updated annually, most recently by the Capital Allowances (Energy-saving Plant and Machinery) Order 2019, SI 2019/501 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).

First year allowances (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:
•be eligible for plant and machinery capital allowances under the general rules (CAA 2001, ss 11–270)
•not be caught by the general exclusions applicable to first year qualifying expenditure (CAA 2001, s 46)
•be new and unused plant or machinery
•be of a description specified by Treasury Order

•meet the energy-saving criteria specified by Treasury Order for plant / machinery of that description

CAA 2001, s 45A refers to plant / machinery of a ‘description’ and meeting criteria, both specified by Treasury Order. In practice, the Treasury Order gives statutory authority to two lists, which are available on the Department for Business, Energy and Industrial Strategy’s website (see below):
•the Energy Technology Criteria List

•the Energy Technology Product List

Both lists are maintained on the GOV.UK website. The government announced changes to the technologies supported on 22 November 2017 that have now been published by way of the Capital Allowances (Energy-saving Plant and Machinery) Order 2018, SI 2018/268. 

This Order came into

force on 22 March 2018 and included the following changes the addition of new sub technologies related to evaporative air coolers saturated steam to

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