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This publication is available at https://www.gov.uk/government/publications/capital-allowances-first-year-allowance-for-electric-charge-points/capital-allowances-first-year-allowance-for-electric-charge-points
Who is likely to be affected
Any business incurring qualifying expenditure on the acquisition of new and unused electric charge-points.
General description of the measure
The measure provides a 100% first-year allowance (FYA) for expenditure incurred on electric charge-point equipment. The allowance will expire on 31 March 2019 for Corporation Tax purposes and 5 April 2019 for Income Tax purposes.
The measure is designed to support the development and installation of electric recharging equipment for electric vehicles as part of the process of promoting the wider uptake of such vehicles. It will encourage the use of cleaner vehicles by making electric charge-points a more common feature on the high street.
The measure complements the 100% FYA for cars with low carbon dioxide (CO2) emissions, and the 100% FYA for cars powered by natural gas, biogas and hydrogen.
Background to the measure
This measure is designed to support transition in the UK to cleaner zero and ultra-low emission vehicles, which will help improve air quality in the UK’s towns and cities and protect the environment for the next generation.
The measure will have effect for expenditure incurred on or after 23 November 2016. It will expire on 31 March 2019 for Corporation Tax and 5 April 2019 for Income Tax purposes.
Business expenditure on plant and machinery usually qualifies for tax relief in the form of capital allowances, which are normally given at the rate of 18% a year on a reducing balance basis.
Legislation will be introduced in Finance Bill 2017 to provide this new FYA for just over 2 years and 4 months. The legislation will be backdated to 23 November 2016.
Summary of impacts
Exchequer impact (£m)
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This measure is expected to have a negligible impact on the Exchequer.
This measure is not expected to have any significant economic impacts.
Impact on individuals, households and families
The measure is not expected to impact on individuals or households as capital allowances can only be claimed in the course of business.
The measure is not expected to impact on family formation, stability or breakdown.
This measure does not impact on the equality of groups with protected characteristics.
Impact on business including civil society organisations
This measure is expected to have a negligible impact on businesses who can now claim a 100% allowance on the acquisition of electric charge-points. Businesses will incur a negligible one-off cost for familiarisation with the new rules. It is not expected there will be any additional on-going costs.
It has not been possible to determine how many businesses use electric vehicles. However, the latest available information suggests that there were only 4,262 separate locations for electric charge-points in existence in November 2016. As many of these are provided by public organisations, it is expected that very few businesses will be negatively affected.
Small and micro business assessment - this measure applies to all sizes of business, but in practice it impacts only on those businesses with qualifying plant and machinery expenditure above the level of the annual investment allowance of £200,000.
As a result there is expected to be an extremely limited impact on small firms, the vast majority of which incur less than £200,000 per annum on capital expenditure and who are unlikely to invest in this technology due to the costs of the equipment. Additionally there are separate workplace grants available for businesses who install electric charge points for use of their employees.
It will not affect civil society organisations who can’t make claims for capital allowances.
Operational impact (£m) (HM Revenue and Customs or other)
There will be a one-off estimated IT cost to implement this measure in the region of £280,000.
Other impacts have been considered and none have been identified.
Monitoring and evaluation
The measure will be kept under review alongside data from the Department for Transport.
If you have any questions about this change, please contact Tunde Ojetola on Telephone: 03000 585916 or email: firstname.lastname@example.org.
Jane Ellison MP, Financial Secretary to the Treasury has read this tax information and impact note and is satisfied that, given the available evidence, it represents a reasonable view of the likely costs, benefits and impacts of the measure.