Capital Allowances

Allowances, specific to investment in plant and machinery assets (vehicles, machines, office equipment, etc.), are called 'Capital Allowances' and apply principally to business, however, can also apply to employment.  They are applied in standard form by taking a deemed percentage of the purchase, or transfer, value and using this percentage to offset a tax liability.

The reduced value of the asset, by virtue of extraction of the percentage is called the 'written down value' (WDV) and this is then used ongoing, per tax year, until the WDV reduces to zero.

There is also a form of allowance called 'Annual Investment Allowance' (AIA) which allows the full value to be claimed in 'one-hit'.

Capital allowances can be 'disclaimed' in any tax year, accordingly maintaining their value, if there is no advantage in claiming them.