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Capital allowances: What’s new?

Shared from Tax Insider: Capital allowances: What’s new?
By Chris Thorpe, May 2024

Chris Thorpe looks at where we are with capital allowances. 

Accounts depreciation is not allowed within tax calculations; it’s too subjective, so instead of that capital allowances generally apply for tax purposes. These allowances have been in place for ‘wear and tear’ to plant and machinery since 1878, with a factory and mills allowance allowing for economic depreciation within a trading business.  

HMRC provides a useful history in its Capital Allowances Manual at CA10040. The current legislation is contained within the Capital Allowances Act (CAA) 2001. 

What are they exactly? 

Allowances themselves are given through a ‘written-down allowance’, which is 18% of the cost and subsequent written-down value of assets in a ‘general pool’ and 6% in a ‘special rate’ pool (which contains cars with CO2 emission of

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