Budget Notes

BN10 100 PER CENT FIRST-YEAR CAPITAL ALLOWANCES FOR NATURAL GAS, BIOGAS AND HYDROGEN REFUELLING EQUIPMENT

Who is likely to be affected?

1. Businesses planning to purchase equipment for refuelling vehicles with natural gas, biogas or hydrogen fuel.

General description of the measure

2. The 100 per cent first-year allowance (FYA) for expenditure incurred on natural gas and hydrogen refuelling equipment due to end on 31 March 2008 will be extended for an additional five years to 31 March 2013. Its scope has also been extended to include refuelling equipment for biogas.

Operative date

3. The measure will have effect for expenditure incurred on or after 1 April 2008.

Current law and proposed revisions

4. Business expenditure on plant and machinery normally qualifies for tax relief as capital allowances, which on and after 1 April 2008 are given at the rate of 20 per cent a year on a reducing balance basis.

5. A scheme exists that gives 100 per cent FYAs to businesses that purchase equipment required to refuel natural gas and hydrogen powered vehicles. This scheme is due to end on 31 March 2008.

6. Legislation will be introduced in Finance Bill 2008 to extend this scheme for five years, to 31 March 2013, and on and after 1 April 2008 extend its scope to include biogas refuelling equipment for vehicles. Biogas is a nonfossil fuel substitute for natural gas.

Further advice

7. If you have any questions about this change, please contact Nick Williams on 020 7147 2541 (email: nicholas.williams@hmrc.gsi.gov.uk). Information about Budget measures is available on the HM Revenue & Customs website at www.hmrc.gov.uk