Special Rate Pool (SRP)
Not surprisingly the special rate writing down allowances will reduce from 8% to 6%. This will apply to Integral features, long life assets and thermal insulation. This change starts 1 April for corporation tax payers and 5 April for income tax payers. Once again, we will have hybrid rates for financial periods spanning these dates to allow for the change.
Annual Investment allowance (AIA)
The current Annual Investment allowance of £200,000 will increase to £1,000,000. This increase will start on 1 January 2019 and last for two years.
The AIA allows 100% deduction for qualifying plant and machinery expenditure and will go some way to mitigate the reduction in the SRP rate from 8% to 6%.
Enhanced capital Allowances (ECA)
The Enhanced Capital Allowances scheme which allows a 100% first year allowances for green equipment will end in April 2020. It is understood that the energy technology list from which the eligible equipment can be sourced will continue to be managed by the government. This will assist energy efficient product selection by end users.
Structures And Buildings Allowance (SBA)
A Structures and Buildings Allowance has been introduced. This relief will be available for the bricks and mortar costs of constructing and refurbishing non-residential structures and buildings (Excluding land costs). The allowance will be taken on a straight-line basis of 2% per annum for 50 years. SBA’s will be available on new building contracts entered into after 29 October 2018.
It is understood that the unused SBA’s will ‘travel’ with the property on disposal. The details of this new allowance will be provided in the next Finance Act.