Introduction to capital allowances

In this lesson

1. 0:00 Introduction to capital allowances
2. 0:32 Main pool and special rate pool overview
3. 1:30 Annual investment allowance and first year allowance
4. 3:15 Short life assets and private use assets
5. 4:06 What counts as plant and machinery
6. 5:04 Function versus setting distinction
7. 6:12 Valuing assets for capital allowances

About this lesson

Capital allowances are a core topic in tax exams, and understanding which assets fall into different pools, the rates you can claim, and how to handle private use is essential for exam success. This lesson covers the main pools available to businesses: the main pool (18% writing down allowance), the special rate pool (6% for long-life assets and high-emission cars), the annual investment allowance (100% relief up to £1 million), and first year allowances. You'll also explore how to classify assets correctly by distinguishing between plant and machinery (which qualifies for allowances) and buildings or settings (which generally don't), plus the important exceptions like integral features and movable partitions. The session walks through how to value assets for capital allowance purposes, including the impact of VAT registration and private use adjustments. By the end, you'll have a solid foundation to tackle capital allowances computations and understand why each asset type is treated differently. Take time to work through the detail — this knowledge builds throughout the lesson and is crucial for applying these rules to exam questions.

Duration: 7m