First Year Allowances (FYA) on Plant & Machinery

Until April 2008, small and medium enterprises were eligible to a first year allowance (FYA) of 40 or 50 percent on plant and machinery. FYA has now beer replaced with Annual Investment Allowance (AIA) that is available to large as well as small and medium enterprises. However, FYA is still available to businesses engaged in certain industries.

We look at these industries and their FYA eligibilities in this article.

Environmentally Beneficial Plant & Machinery

CA23135 regulates that 100% FYA is allowable on plant and machinery used for improving water quality and reduce water use, for expenditure incurred after 1 April 2003. These include:
• efficient taps;
• efficient toilets;
• flow controllers;
• leakage detection;
• meters;
• rainwater harvesting equipment;
• water reuse systems;
• cleaning in place equipment;
• efficient showers;
• efficient washing machines;
• small scale slurry and sludge dewatering equipment;
• vehicle wash water reclaim units;
• efficient industrial cleaning equipment;
• waste management for mechanical seals.

Energy Saving Plant & Machinery

CA23140 specifies that capital expenditure on new energy saving plant and machinery is eligible for 100% FYA. The items must be included in a qualifying technology or product list issued by the Secretary of State for the Department of Environment, Food and Rural Affairs to qualify for FYA. CA23140 specify the conditions and class of items.

Other eligible Items

CA23153 makes expenditure on cars with low carbon dioxide emissions eligible for 100% FYA. The cars must be new and not second hand cars, and must be either an electric car or a car with CO2 emissions of not more than 110gm per km driven. See CA23153 for conditions and other details.

CA23155 allows expenditure on natural gas and hydrogen refueling equipment at a gas refueling station, 100% deductible as FYA. Items such as storage tanks, compressors, controls and meters, gas connections and filling equipment are examples of eligible equipment. Biogas equipment also qualifies.
CA23157 provides 100% FYA for expenditure incurred by a company wholly for the purpose of a trade of extraction of oil or gas in the UK or UK Continental Shelf.

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