The Capital Allowances (First-year Tax Credits) Order 2013

As the tax return deadline for 2012/13 is approaching, I thought I’d just to keep you informed about SI 464 of 2013 which may affect some of you.

It is relation to The Capital Allowances (First-year Tax Credits) Order 2013 and came into force on 28th March 2013.

Capital Allowances & HMRC ruling Arthur Kemp

Capital Allowances & HMRC ruling Arthur Kemp

First-year tax credits were originally introduced in 2008 for a five year period ending on 31 March 2013. They are designed to further encourage investment in energy-efficient and environmentally beneficial plant or machinery by allowing companies within the charge to corporation tax, to surrender tax losses attributable to these ECAs, for a payable tax credit (known as a first-year tax credit).

The losses that may be surrendered are specifically those attributable to ECAs claimed on energy-saving or environmentally beneficial plant and machinery. The amount of first-year tax credit that a company will receive is 19 per cent of the surrenderable loss for the relevant period, although this is subject to an upper limit. The upper limit of the tax credit is the greater of –

  • the total of the company’s PAYE and NICs liabilities for the relevant period; or
  • £250,000.

This Order extends the period during which relevant first-year expenditure on designated energy-saving and environmentally beneficial technologies must be incurred in respect of which a first-year tax credit may be claimed for a further five years to 31 March 2018.

The legislation only applies to companies.
I Hope it’s useful!

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Arthur Kemp – Founder & Managing Director 

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