Capital Allowances Act 2001 Explained

Short Title:	Capital Allowances Act 2001
Parliament:	Parliament of the United Kingdom
Long Title:	An Act to restate, with minor changes, certain enactments relating to capital allowances.
Year:	2001
Statute Book Chapter:	2001 c. 2
Territorial Extent:	United Kingdom
Royal Assent:	22 March 2001
Commencement:	chargeable periods ending on or after 6 April 2001 (income tax) chargeable periods ending on or after 1 April 2001 (corporation tax)
Original Text:	http://www.legislation.gov.uk/ukpga/2001/2/contents/enacted
Revised Text:	http://www.legislation.gov.uk/ukpga/2001/2/contents

The Capital Allowances Act 2001 is an Act of the Parliament of the United Kingdom that governs how capital allowances are deducted from income taxable under the Income Tax Act 2007 and the Corporation Tax Act 2009.

Types of allowances

Capital allowances fall under several categories:^[1]

• initial allowance (IA);

• annual investment allowance (AIA)

• first-year allowance (FYA);

• writing down allowance (WDA);

• balancing allowance.

Under the Act, they are available for specified types of claims:^[2]

CAA 2001: available allowances

Part	Allowance	IA	AIA	FYA	WDA
2	plant and machinery		^[3]	^[4]	^[5]
3	industrial buildings	^[6]			^[7]
4	agricultural buildings^[8]
4A	flat conversion^[9]
5	mineral extraction				^[10]
6	research and development			^[11]
7	know-how				^[12]
8	patents				^[13]
9	dredging				^[14]
10	assured tenancies^[15]				^[16]

Notes and References

1. Web site: CA11101 - General: claims: types of capital allowance. HM Revenue and Customs.
2. CAA 2001, s. 1
3. on or after 1 April 2008 (for CT purposes) or 6 April 2008 (for IT purposes) that is not otherwise excluded: Web site: CA23084 - PMA: Qualifying expenditure: Annual Investment Allowance (AIA) qualifying expenditure: what is AIA qualifying expenditure?. HM Revenue and Customs.
4. restricted to specified qualifying activities: Web site: CA23110 - Plant and Machinery Allowance (PMA): First Year Allowance (FYA): expenditure on which available and rates. HM Revenue and Customs.
5. Web site: CA23220 - PMA: WDA & balancing adjustments: Rate of WDA. HM Revenue and Customs.
6. available in specified enterprise zones: Web site: CA34050 - IBA: initial allowance: conditions. HM Revenue and Customs.
7. withdrawn for financial years beginning on or after 1 April 2011: Web site: CA34050 - IBA: initial allowance: conditions. HM Revenue and Customs.
8. withdrawn for financial years beginning on or after 1 April 2011: Web site: CA40050 - ABA: outline. HM Revenue and Customs.
9. repealed by Finance Act 2012, with effect from April 2013Web site: CA43100 - Outline, background and definitions. HM Revenue and Customs.
10. Web site: CA50410 - MEA: Allowances and charges: How allowances are given. HM Revenue and Customs.
11. 100% of qualifying expenditure or amount claimed, whichever is less: Web site: CA60500 - RDA: Allowances and charges. HM Revenue and Customs.
12. Web site: CA71200 - Know-how: Allowances: Calculation of allowances and charges. HM Revenue and Customs.
13. Web site: CA75110 - Patents: Allowances: Calculation of allowances. HM Revenue and Customs.
14. Web site: CA80100 - Dredging: Outline. HM Revenue and Customs.
15. where qualifying expenditure was incurred before 1 April 1992: Web site: CA85200 - Assured Tenancy Allowances: Background and definitions. HM Revenue and Customs.
16. available only to approved bodies owning specified buildings: Web site: CA86000 - Assured Tenancy Allowances: Writing down allowances. HM Revenue and Customs.