Meaning of “new and unused” clarified for CAs purposes
The guidance on what “new and unused” means for the purposes of first-year allowances has been updated in order to make things clearer. What’s the full story?
The guidance on what “new and unused” means for the purposes of first-year allowances has been updated in order to make things clearer. What’s the full story?
HMRC’s guidance has been updated to make the capital allowances rules on qualifying expenditure for first-year allowances (FYAs) clearer.
The 100% FYA for main rate expenditure (full expensing) and the 50% FYA for special rate expenditure can only be used if the plant and machinery is new and unused. The guidance has now been updated to clarify that:
- where expenditure is incurred on upgrading or improving an existing asset by adding new parts, the expenditure may qualify for full expensing/the 50% FYA
- where new and unused parts are combined with used or second-hand parts to create a new asset, only the expenditure incurred on the new and unused parts may qualify for full expensing/the 50% FYA; and
- where something new has been made from recycled materials, the new asset will be unused and not second hand for the purposes of full expensing/the 50% FYA.
It may be prudent to revisit expenditure from previous years to check whether FYAs should have been claimed.
Related Topics
-
Tax relief on equipment you haven’t paid for (yet)
The timing of tax relief for purchases of equipment isn’t straightforward when payments are delayed or goods are purchased through hire purchase (HP) agreements. How can you use these rules to your advantage and get tax relief before you’ve paid the final invoice?
-
HMRC clarifies summer holiday VAT cut
HMRC has published further guidance on the temporary VAT reduction for certain activities during the school summer holidays. The additional detail helps businesses determine which supplies qualify for the relief and, importantly, which do not. What do you need to know?
-
First MTD quarterly deadline arrives
The first quarterly reporting deadline under Making Tax Digital for Income Tax (MTD IT) is 7 August 2026. HMRC has now confirmed what will happen to those who miss it, including when it will start sending reminder letters. What do you need to know?
This website uses both its own and third-party cookies to analyze our services and navigation on our website in order to improve its contents (analytical purposes: measure visits and sources of web traffic). The legal basis is the consent of the user, except in the case of basic cookies, which are essential to navigate this website.