An asset is a long-life asset for capital allowances and accounting purposes if its expected useful economic life is at least 25 years.

Estimates of life expectancy are taken from new, so if an asset is purchased second hand the previous owners use is taken into account.

Expenditure on a long-life asset is only treated as such where the total expenditure on long-life assets in the period exceeds the monetary limit. The monetary limit is £100,000 per annum, adjusted accordingly for accounting periods greater or less than 12 months. For a company, the limit is also proportionately reduced where there are associated companies in the period.

The monetary limit exception does not apply to certain expenditure (eg plant and machinery acquired for leasing) or to partnerships with a corporate partner.

Agreements have been made with particular industry bodies to exclude certain assets from being treated as long-life assets, these include certain aircrafts, greenhouses and printing equipment.

Since April 2012 solar panels have been treated as long-life assets.

Capital allowances on long-life assets:

  • New expenditure may qualify for a 100% Annual Investment Allowance (AIA).
  • When an asset is pooled, it is added to the special rate pool with writing down allowances of 8% per year.
  • Long-life assets may be Fixtures and may be Integral features (unless they are installed within a dwelling-house, hotel, office, retail shop or showroom). 

What's New?

Following an announcement at Budget 2018, Finance Act 2019  includes legislation to:

  • End ECAs from 1 April 2020 for companies and 6 April 2020 for unincorporated businesses.
  • Reduce the special writing down allowance rate for long-life assets from 8% to 6% from 1 April 2019 for companies and 6 April 2019 for unincorporated businesses.
  • Temporarily increase the AIA to £1million for two years from 1 January 2019.

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