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Use the 50% first year allowance (FYA) template to give a 50% first-year allowance on qualifying new special-rate plant and machinery. The 50% FYA sits alongside full expensing, which applies to main-pool assets: where full expensing gives 100% on main-rate expenditure, the 50% FYA gives 50% in the first year on special-rate expenditure, with the balance relieved through the special rate pool.
Table of contents
- When should I use this template?
- Before you start
- How the analysis works
- What flows through to the rest of Corporation Tax?
- Frequently asked questions
When should I use this template?
Use it where the company has incurred qualifying expenditure on new special-rate plant and machinery (for example integral features or long-life assets) and wishes to claim the 50% first-year allowance, or where it is disposing of an asset on which the 50% FYA was claimed.
The 50% FYA was introduced alongside the super-deduction for expenditure from 1 April 2021 and continues alongside full expensing for expenditure from 1 April 2023.
Before you start
A business type must be selected in the Business type section of the Return information template. If none is selected, the template shows a warning and cannot calculate.
Qualifying additions are pulled in from the Total fixed asset additions template, so mark the relevant additions with the 50% FYA tax treatment there first.
How the analysis works
For qualifying additions, the template gives a 50% first-year allowance in the period of expenditure. The remaining 50% is dealt with through the special rate pool in the normal way. On disposal of a 50% FYA asset, the template calculates the balancing charge to bring the relief back into account.
What flows through to the rest of Corporation Tax?
The 50% allowance reduces taxable profit in the period of expenditure, and any balancing charge on disposal increases taxable profit. Both feed the capital allowances in the tax computation, with the appropriate iXBRL tags.
Frequently asked questions
What qualifies for the 50% FYA?
New and unused special-rate plant and machinery. New main-rate expenditure qualifies for full expensing (100%) instead.
What happens to the other 50%?
The remaining 50% is written down through the special rate pool at the normal rate.
Why is there a balancing charge on disposal?
Because a first-year allowance was given, disposal of the asset can give rise to a balancing charge, which the template calculates.