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HMRC internal manual

Capital Allowances Manual

PMA: FYA: First-year tax credits: relevant first-year expenditure, pre-trading expenditure, additional VAT liabilities & rebates

CAA01/Sch.A1 para 3

A company may surrender (for a tax credit) an amount of unrelieved loss (CA23183) not exceeding the amount of FYA given in respect of relevant first-year expenditure in the chargeable period. Expenditure is relevant first-year expenditure if

  • it is on energy-saving (CA23140) or environmentally beneficial (CA23135) plant and machinery,


  • if it is incurred in the period 1 April 2008 to 31 March 2020

Additional VAT liabilities and rebates

While the VAT payable on an asset is usually determined by the first use of the asset, the VAT Capital Goods Scheme (CA29230) may adjust the amount of VAT due if the use of the asset changes during the period of ownership. This may result in an additional VAT liability or rebate. Although an additional VAT liability may qualify for an FYA, such expenditure is not relevant first-year expenditure and will not qualify for a first-year tax credit. Similarly, first-year tax credits are not recouped where there is an additional VAT rebate under the Capital Goods Scheme.