Special rate pool and long life assets

Produced by Tolley
Special rate pool and long life assets

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

  • Special rate pool and long life assets
  • Special rate pool
  • Integral features
  • Expenditure incurred on replacement of an integral feature
  • Integral features and anti-avoidance
  • Long life assets

Special rate pool

Expenditure on some types of plant or machinery must, if neither annual investment allowance (AIA) nor first year allowances (FYAs) are available, be allocated to a ‘special rate pool’.

Expenditure to be allocated to the special rate pool consists of expenditure incurred on:

  1. integral features, see below

  2. long life assets, see below

  3. thermal insulation of buildings used in a business

  4. new or second-hand cars with CO2 emissions of more than 110g/km (to be reduced to more than 50g/km in April 2021), and

  5. solar panels

CAA 2001, s 104A(1)

The annual writing down allowances available on the special rate pool is 6% from 1 April 2019 (corporation tax) and 6 April 2019 (income tax). Prior to these dates, the special rate was 8%.

Where a period straddles the date that the change in rate occurs, the special rate is calculated as a hybrid rate for the whole period. This is done on a strict time apportionment according to the number of days in the chargeable period that each rate was in force. The resulting percentage is rounded to two decimal places. The calculation may not be done on a monthly basis.

For example, where a business has a year-end of 31 December 2019, the rate will be 6.53% being the hybrid rate of 95 days at 8% and 270 days at 6%, rounded up to two decimal places.

Expenditure that would otherwise fall into the special rate pool is eligible for the AIA, with the exception of cars and certain other exclusions, see the Annual investment allowance (AIA) guidance note. In some cases, expenditure may also be eligible for FYAs if it meets the necessary conditions,

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