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HMRC internal manual

Employment Income Manual

Deductions from earnings: capital allowances: calculating the allowances due: first year allowances: exceptions

The 40% or 50% FYAs were withdrawn in respect of expenditure incurred on or after 6 April 2008 (for IT purposes) and were replaced by the Annual Investment Allowance (AIA) (see EIM36605).

The following items did not qualify for first year allowances, even if they were bought during a qualifying period:

  • motor cars and motor cycles (see EIM36750)
  • any items bought from a connected person (see CA28300)
  • any items bought in the year of assessment in which the office or employment ceases (because then a balancing charge or balancing allowance arises instead, see EIM36670).

As regards the first bullet point above, remember that employees cannot claim any capital allowances for cars or motor cycles after 5 April 2002 (see EIM36520).