First year allowances

Produced by Tolley
  • (Updated for Budget 2021)
First year allowances

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

  • First year allowances
  • Low emission cars
  • Zero-emission goods vehicles
  • Electric vehicle charging points
  • Gas refuelling stations
  • New assets in designated assisted areas (within enterprise zones)
  • New assets in tax sites in a freeport
  • Energy-saving plant or machinery
  • Qualifying energy-saving plant / machinery
  • Certificates of energy efficiency
  • More...

First year allowances (FYAs) are available on the following items:

  1. new and unused cars with low CO2 emissions, or car is electric

  2. new and unused zero-emission goods vehicles

  3. new electric vehicle charging points

  4. gas refuelling stations

  5. expenditure on new plant or machinery which qualifies as a special rate asset and is incurred on or after 1 April 2021 and before 1 April 2023 (companies only), see the Super-deduction and special rate first year allowance guidance note

  6. plant and machinery for use primarily in an area which is a designated assisted area in an enterprise zone (companies only)

  7. plant and machinery for use primarily in an area which is a designated tax site in a freeport (companies only)

Before April 2020, FYAs were also available for items on the energy technology list and the water technology list, but these have now been repealed. First year tax credits were also abolished from April 2020, although there is still a four-year clawback period.

These are detailed further below.

Low emission cars

The amount of capital allowances available for cars are based on levels of CO2 emissions, as established at manufacture.

From 1 April 2021, the limit is 0g/km. From 1 April 2018 to 31 March 2021, the limit is 50g/km.

Please refer to the Capital allowances on cars guidance note for further commentary.

Zero-emission goods vehicles

FYAs at a rate of 100% are available for expenditure incurred on new goods vehicles which do not emit any CO2 when driven.

Expenditure qualifies for FYAs if the following conditions are satisfied:

  1. it is incurred in the period beginning 1 April 2010 and ending 31 March 2025 (corporation tax) or the period beginning 6 April 2010 and ending 5 April 2025 (income tax)

  2. it is incurred on the provision of a zero-emission goods vehicle

  3. the vehicle is unused and not second-hand

  4. the vehicle is registered

  5. the expenditure is not excluded by CAA 2001, s 45DB (exclusions from allowances for zero-emission goods vehicles) or CAA 2001, s 46

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