Qualifying Expenditure

Qualifying expenditure will generally be the cost of the Plant and Machinery to the taxpayer.

It does not matter how long a building has been owned or when the expenditure was incurred, as a claim can be made at any time.

The value of capital allowances will depend on when qualifying expenditure is incurred.

Where expenditure was incurred prior to April 2008, writing-down allowances on Plant and Machinery were available at a rate of 25% per annum on a reducing balance basis.  Following the Finance Act 2008 this was reduced to 20% for periods after April 2008, and with effect from April 2012 will be reduced to 18% per annum on a reducing balance basis.

For expenditure incurred after April 2008, The Finance Act 2008 introduced a 10% writing-down allowance for expenditure on assets regarded as Integral Features and on Long Life Assets, which from April 2012 will be reduced to 8% per annum on a reducing balance basis.

Integral Features as introduced by the Finance Act 2008 include the following:-

• Electrical Installations
• Cold water systems
• Heating, Ventilation and Air Conditioning systems
• Lifts and Escalators
• External Solar Shading

All other expenditure on qualifying assets are treated as Plant and Machinery and attract 20% writing-down allowances, reducing to 18% with effect from April 2012.

Prior to the introduction of these Integral Features provisions, certain assets in most circumstances including general power and lighting, cold water systems and external solar shading, did not qualify for capital allowances.