PLANT AND MACHINERY CAPITAL ALLOWANCES
Capital Allowances enable businesses to claim back tax relief on certain company expenses. These can include items purchased for professional use by the business and are referred to as “plant and machinery”.
CAPITAL ALLOWANCES?
Tax agents and advisers play an important role in helping businesses claim the maximum amount of tax relief possible. CapEx Associates’ capital allowances specialists can help with reviewing and filling section 32 of the CPSE (Commercial Property Standard Enquiry). Section 32 deals with Capital Allowances and whether the current owner has claimed for any ’embedded plant and machinery’ within the building. Conveniently located in Solihull, in the heart of the West Midlands, our tax specialists can assist local and national businesses as well as sole traders. Our high level of expertise will help identify opportunities for Plant and Machinery Capital Allowances and claim maximum tax relief.
Definition of plant and machinery capital allowances
Plant and machinery is an old-fashioned term still used to describe assets used by the company, in order to carry out business operations. It cannot include assets that were bought but not used for the purpose of benefiting the business.
Plant is any equipment used to carry out business operations. It does not include the business premises but it can include equipment within them.
Machinery is any device with moving parts used to conduct business activities. The device does not have to be using electrical power.
Plant and Machinery include:
- Fixtures – bathroom suites, CCTV, fire alarms
- Business vehicles (such as vans and cars)
- Integral features – heating systems, water systems, electrical systems, air-conditioning in the business property
- The costs incurred for destroying and/or removing existing plant and machinery
- Building alterations to allow the installation of additional plant and machinery for the benefit of the business
What is not categorised as plant and machinery
- Plant and Machinery Capital Allowances can only be claimed for assets owned by the company. Also excluded are:
- Any structural parts such as bridges, roads and docks surrounding the business property.
- Entry points such as doors, windows and shutters
- Gas and water mains supply
- Any purchases made for non-business or entertainment purposes
BUSINESSES CAN CLAIM THREE TYPES OF PLANT AND MACHINERY CAPITAL ALLOWANCES
Annual Investment Allowance (AIA)
The annual investment allowance (AIA) is a 100% Capital Allowance for Plant and Machinery with the exception of cars and plant and machinery purchased during the company’s final trading period. Between 1 April 2014 and 31 December 2015 (with some exceptions) the maximum AIA available was up to £500,000. From 1 January 2016, this was reduced to £200,000.
Written-Down Allowances (WDAs)
Written-Down Allowances (WDAs) are available for businesses who have already claimed AIA and have exceeded the annual threshold, or if the asset in question does not qualify for AIA.
Written-Down Allowances have a flat rate and are split into three asset pools:
- Main Pool – flat rate of 18%. The main pool includes most plant and machinery.
- Special Rate Pool – flat rate of 8%. Can include long-life assets or higher emission cars
- Single Asset Pools – varying flat rate of 18% or 8% depending on the asset
First Year Allowance
First-Year Allowances are created to encourage business owners to invest in energy-efficient equipment. They can be claimed together with AIA, as they don’t count towards it.
How to claim plant and machinery capital allowances
Due to the many complex rules, claiming Plant and Machinery Capital Allowances can be time-consuming and complicated even for experienced business owners, accountants and solicitors. One important thing to remember is that businesses wishing to claim under AIA or the First-Year Allowance should submit their claim during the same accounting period that an asset was purchased, in order to claim the full available value. CapEx Associates’ team of tax specialists can help you claim maximum Plant and Machinery Capital Allowances by completing the Capital Allowance section of the CPSE on your behalf. We can help both local and national businesses as well as sole traders to claim all the tax they are entitled to. Get in touch today to find out more or visit us in our Solihull office.