First-year allowances

Introduction

First-year allowances are a tax allowance you can claim on certain purchases of plant or machinery in the year you make them.

Almost all businesses other than mixed partnerships can claim an Annual Investment Allowance (AIA) for expenditure of up to £50,000. This has replaced the 40 per cent and 50 per cent first-year allowances which were available to small and medium-sized businesses before April 2008.

In certain circumstances, businesses can also claim first-year allowances of 100 per cent in the year they make the purchase.

Additionally, another type of capital allowance - the writing down allowance (WDA) - can be claimed for assets that have been purchased during the year for where a first-year allowance has not been claimed.

You should note that you cannot claim first-year allowances or WDA in respect of expenditure included in your AIA.

This guide explains the different types of first-year allowance and WDA what you need to do and how to claim them.

Read our guide on Capital allowances: the basics

Subjects covered in this guide

• Introduction
• What's eligible for first-year and writing down allowances?
• Work out your allowance
• Claim first-year allowances

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