Article Summary
This guidance note provides an overview of the
capital allowances available for expenditure on plant and machinery. It explains the three main types of allowances - the
annual investment allowance, first year allowances, and writing down allowances. Writing down allowances are calculated by pooling expenditure into different pools, with the most common being the main rate pool which gets an 18% allowance. The note covers how to calculate writing down allowances, including how to account for additions to and disposals from the pools. It also explains balancing adjustments on disposals or cessation, and allowances for short/long accounting periods. The guidance covers the rules on claiming allowances, and the option to disclaim allowances to increase future claims. It explains the small pools rules, which can provide a useful simplification for small businesses. Overall, this is a key guidance note for any tax professional to understand the computation of capital allowances.