Capital Allowances for Smaller Businesses

April 2006

In Budget 2006, the government announced that capital allowances in the form of first year allowances (FYAs) on plant and machinery acquisitions would be at the rate of 50% for small businesses. The normal rate is 40%. The increased rate will apply for 12 months from April 2006. The rates apply for unincorporated businesses from 6 April and for companies from 1 April 2006.

The increase in allowances is supposed to, amongst other things, be a sweetener for the withdrawal of the 0% starting rate of corporation tax.

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For details of the changes see HMRC budget notice
HMRC budget notice 2

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