Capital allowances – reduction of rate of special writing down allowance

The measure

The measure reduces the rate of writing down allowance available on the plant and machinery special rate pool from 8% to 6% per annum (reducing balance basis). This reduction has been introduced in conjunction with the new Structures and Buildings Allowance. 

Who will be affected?

Businesses investing in plant and machinery which qualifies for special rate writing down allowances. This is likely to have application to businesses across a broad range of industries as it covers integral features and long life assets amongst other assets.  

When will the measure come into effect?

The 6% rate will be effective from 1 April 2019 for businesses within the charge to corporation tax, and from 6 April 2019 for businesses within the charge to income tax. 

Our view

The impact of this measure is likely to be relatively significant for businesses that have large special rate pool balances as well as those that will have special rate qualifying expenditure exceeding the maximum amount of the Annual Investment Allowance.