First year allowances: the basics

Plant and machinery 'First-Year Allowances (FYA)' enable you to make a claim for up to 100 per cent of the cost of certain qualifying items against your business profits in the year of purchase.

FYA of 100 per cent are currently available for expenditure on:

  • certain energy-saving and water efficient equipment, but only if the item appears on a specific list of qualifying equipment (these are known as 'Enhanced Capital Allowances (ECA)')
  • new cars with very low carbon dioxide emissions
  • certain vehicle gas refueling equipment
  • zero emission goods vehicles
  • plant and machinery for use in certain enterprise zones

All of the above allowances are available if you pay Income Tax as self-employed, a partnership or sole trader, or if you pay Corporation Tax as a company or organisation.

From April 2010 certain zero emission goods vehicles qualify for FYA. Only companies are eligible for enterprise zone ECAs.

This guide provides a summary of the above qualifying FYA with links to more detailed information on each.

On this page:

What you can claim FYA for

This guide provides an overview of the different types of FYA that your business may be able to claim. However please note that FYA are not generally available on the cost of plant and machinery that a business buys to lease out. There are also restrictions when buying plant and machinery for use within a property that you lease out. To find out more see the section below on FYA: non-qualifying items.

Water efficient equipment

FYA are available for expenditure on plant and machinery that is designed to improve water quality and/or reduce water use, for example, water efficient showers and taps, and vehicle-wash water reclaim units - and is included as a qualifying technology or product specified in a Technology List or a Product List issued by the Secretary of State for the Department for Environment, Food and Rural Affairs.

As described above, you can't usually claim this allowance for equipment that you buy for leasing out. Follow the link below for more information about what equipment qualifies and how to claim.

FYA for water efficient technologies

If your business or organisation is liable to Corporation Tax, there are also some special rules that may allow you to surrender losses you make that are attributable to investments in qualifying equipment in return for a cash payment called a first-year tax credit. It is the making of the claim that creates the loss and it is only the loss attributable to the capital allowance claim for these assets that is relevant for the first-year tax credits.

FYA for water efficient technologies

Find out more about first-year tax credits

Energy-saving equipment

FYA are also available for expenditure on energy-saving equipment, such as high-efficiency lighting units and solar thermal systems, that is included as a qualifying technology or product specified in a Technology List or a Product List issued by the Secretary of State for the Department of Energy and Climate Change.

As described above, you can't usually claim this allowance for equipment that you buy for leasing out. Follow the link below to find out more information about what equipment qualifies and how to claim.

FYA for energy saving products

If your business or organisation is liable to Corporation Tax, there are also some special rules that may allow you to surrender losses you make that are attributable to investments in qualifying equipment in return for a cash payment called a first-year tax credit. It is the making of the claim that creates the loss and it is only the loss attributable to the capital allowance claim for these assets that is relevant for the first-year tax credits.

FYA for energy saving products

Find out more about first-year tax credits

Low CO2 emission cars

FYA are available for expenditure on a new electric car, or a new, unused car with CO2 emissions up to the threshold. For expenditure incurred before 1/6 April 2013 the threshold is not more than 110gm per km driven. From 1/6 April 2013 (subject to legislation) the threshold was reduced to not more than 95g per km driven Follow the link below for more information on capital allowances on cars.

Capital allowances on plant and machinery

Find out about CO2 emissions for a particular vehicle on the Vehicle Certification Authority (VCA) Car Fuel Data website (Opens new window)

Zero emission goods vehicles

FYA are available from 1 April 2010 for expenditure on a new and unused goods vehicle with zero emissions. It has been announced (subject to legislation) that the FYA will be available up to 31 March 2018 (income tax) 5 April 2018 (corporation tax). There are certain restrictions that apply to the FYA. For more information see the Capital Allowances Manual.

Enterprise zones allowances

Companies of any size can claim 100% FYA for expenditure incurred on new plant or machinery in the period from 1 April 2012 to 31 March 2017 for use in a designated enterprise zones.

Vehicle gas refueling equipment

Until 31 March 2018 (for income tax) 5 April 2018 (for corporation tax) (subject to legislation) 100% FYA are available for expenditure on new plant and machinery installed to refuel vehicles with:

  • natural gas
  • hydrogen
  • biogas

Eligible equipment can include:

  • storage tanks
  • compressors
  • controls and meters
  • gas connections
  • filling equipment

The refueling station does not need to be open to the public or used for cars. For example, an operator of a fleet of commercial vehicles may install a gas refueling station on its premises to refuel its vehicles.

As described above, you can't usually claim this allowance for equipment that you buy for leasing out.

Find out more about expenditure on natural gas and hydrogen refueling equipment

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FYA: non-qualifying items

Non-qualifying items: leasing

FYA are not generally available on the cost of plant and machinery that a business buys to lease out, except in the following circumstances:

  • where the leasing or hiring out is combined with the provision of a service that involves use of the asset, for example, where you lease out a crane with a crane driver to complete a job, or where you provide building access services by erecting or installing scaffolding
  • where you lease out a non-dwelling business property together with plant and machinery that would reasonably be expected to be installed in the type of property in question, for example, leasing out a furnished office space that includes a lift or air conditioning

Plant and machinery in leased out dwellings

Note that FYA are not available on the cost of plant and machinery for use within a property used as a dwelling that you lease out in the UK or overseas. However, items bought for use within common parts may qualify.

Find out more about assets used for leasing and those used in the course of providing a service

Find a list of expenditure that doesn't qualify for first-year allowances

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More help

If you need help in making your capital allowances claim you can contact the HMRC Self Assessment Helpline.

Contact details for HMRC Self Assessment Helpline

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