Finance Act 2013

Finance Act 2013

2013 CHAPTER 29

Introduction

Section 69: Gas Refuelling Stations: Extension of Time Limit for Capital Allowance

Summary

1. Section 69 extends the scheme for 100 per cent first-year allowance (FYA) for expenditure incurred on natural gas, biogas and hydrogen refuelling equipment, which is due to expire on 31 March 2013, for an additional two years to 31 March 2015.

Details of the Section

2. This section provides for the amendment of section 45E Capital Allowances Act 2001 by substituting “2015” for “2013” in section 45E(1)(a) as the new end date for the allowance.

Background

3. Capital allowances allow the cost of capital assets to be written off against taxable profits. They take the place of depreciation charged in the commercial accounts, which is not allowed for tax. Most businesses are entitled to an annual 100 per cent allowance, the Annual Investment Allowance (AIA), for their investment in most plant or machinery up to an annual limit of £25,000. For expenditure above that limit, writing-down allowances (WDA) are available, which are given at the main rate of eighteen per cent or the special rate of eight per cent per annum.

4. FYAs may be available for expenditure on certain types of plant or machinery as an alternative to AIA and WDA. FYAs, currently available at a rate of 100 per cent, accelerate the rate at which tax relief is available for capital spending and allow a greater proportion of the cost of an investment to qualify for tax relief against a business’s taxable profits of the period in which the investment is made.

5. This allowance, which was introduced by the Finance Act 2002, aims to encourage the up-take of natural gas, hydrogen and biogas as fuels for vehicles by providing a tax incentive for businesses to invest in the necessary refuelling infrastructure. It also complements wider measures to encourage the up-take of alternatively fuelled vehicles, including 100 per cent FYAs for cars with low carbon dioxide emissions which is also being extended to 31 March 2015.