Capital Allowances Act 2001

First-year allowances U.K.

52 First-year allowances U.K.

(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 expenditure	Amount
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%
[F1 Expenditure qualifying under section 45A (expenditure on energy-saving plant or machinery	100%]
[F2 Expenditure qualifying under section 45D (expenditure on cars with low CO2 emissions)	100%]
[F3 Expenditure qualifying under section 45E (expenditure on plant or machinery for gas refuelling station)	100%]
[F4 Expenditure qualifying under section 45F (expenditure on plant and machinery for use wholly in a ring fence trade) which is long-life asset expenditure	24%
Expenditure qualifying under section 45F (expenditure on plant and machinery for use wholly in a ring fence trade) other than long-life asset expenditure	100%]
[F5 Expenditure qualifying under section 45H (expenditure on environmentally beneficial plant or machinery)	100%]

[F6 In the case of expenditure qualifying under section 44, see also section 142 of the Finance Act 2004 (substitution of 50% in the case of expenditure incurred by a small enterprise in 2004-05 or financial year 2004).]

(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

F1 S. 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

F2 S. 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

F3 S. 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

F4 S. 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

F5 Words in s. 52(3) added (with effect in accordance with s. 167 of the amending Act) by Finance Act 2003 (c. 14) , Sch. 30 para. 5

F6 Words in s. 52(3) inserted (22.7.2004) by Finance Act 2004 (c. 12), s. 142(3)