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Capital Allowances Act 2001

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52 First-year allowancesU.K.
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(1)A person is entitled to a first-year allowance in respect of first-year qualifying expenditure if—

(a)the expenditure is incurred in a chargeable period to which this Act applies, and

(b)the person owns the plant or machinery at some time during that chargeable period.

(2)Any first-year allowance is made for the chargeable period in which the first-year qualifying expenditure is incurred.

(3)The amount of the allowance is a percentage of the first-year qualifying expenditure in respect of which the allowance is made, as shown in the Table—

Table

Amount of first-year allowances

Type of first-year qualifying expenditureAmount
Expenditure qualifying under section 40 (expenditure incurred for Northern Ireland purposes by small or medium-sized enterprises)100%
Expenditure qualifying under section 44 (expenditure incurred by small or medium-sized enterprises)40%
Expenditure qualifying under section 45 (ICT expenditure incurred by small enterprises)100%
[F1Expenditure qualifying under section 45A (expenditure on energy-saving plant or machinery100%F1]
[F2Expenditure qualifying under section 45D (expenditure on cars with low CO2 emissions)100%F2]
[F3Expenditure qualifying under section 45E (expenditure on plant or machinery for gas refuelling station)100%F3]
[F4Expenditure qualifying under section 45F (expenditure on plant and machinery for use wholly in a ring fence trade) which is long-life asset expenditure24%
Expenditure qualifying under section 45F (expenditure on plant and machinery for use wholly in a ring fence trade) other than long-life asset expenditure100%F4]

(4)A person who is entitled to a first-year allowance may claim the allowance in respect of the whole or a part of the first-year qualifying expenditure.

(5)Subsection (1) needs to be read with section 236 (first-year allowances in respect of additional VAT liabilities) and is subject to—

  • section 205 (reduction of first-year allowance if plant or machinery provided partly for purposes other than those of qualifying activity),

  • section 210 (reduction of first-year allowance if it appears that a partial depreciation subsidy is or will be payable), and

  • sections 217, 223 and 241 (anti-avoidance: no first-year allowance in certain cases).

Textual Amendments

F1S. 52(3): words in Table added (with effect as mentioned in s. 65 of the amending Act) by Finance Act 2001 (c. 9), s. 65, Sch. 17 para. 4

F2S. 52(3): words in Table added (with effect as mentioned in s. 59 of the amending Act) by Finance Act 2002 (c. 23), s. 59, Sch. 19 para. 5

F3S. 52(3): words in Table added (with effect as mentioned in s. 61 of the amending Act) by Finance Act 2002 (c. 23), s. 61, Sch. 20 para. 5

F4S. 52(3): words in Table added (with effect as mentioned in s. 63 of the amending Act) by Finance Act 2002 (c. 23), s. 63, Sch. 21 para. 6

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