CAPITAL ALLOWANCES GUIDE IRELAND

Capital Allowances – Plant & Machinery

Expenditure incurred on or after 4 December 2002 on plant and machinery, fixtures and fittings etc, may be written off at 12.5% per annum on a straight line basis over an 8 year period (previously 20% per annum over 5 years).

Capital Allowances – Motor Vehicles

The annual allowance for motor vehicles (other than taxi and short-term hire vehicles) is 12.5% on a straight line basis for expenditure incurred on or after 4 December 2002 (previously 20% per annum on a straight line basis). The maximum qualifying cost of motor vehicles purchased on or after 1 January 2007 is €24,000 (with varying figures applying for prior years). The €24,000 restricted cost applies to both new and secondhand motor vehicles.

A revised scheme for capital allowances and leasing expenses for cars used for business purposes is being introduced from 1st July 2008. The revision will link the availability of such allowances and expenses to the CO2 emission levels of the vehicles. Cars will be categorised by reference to CO2 emissions with the emissions bands being broadly consistent with the new VRT system, as follows:

Category A Vehicles	Category B/C Vehicles	Category D/E Vehicles	Category F/G Vehicles
0 –120g/km	121 – 155 g/km	156 – 190 g/km	191 g/km +

Cars with CO2 emission levels in Category A/B/C above will benefit from capital allowances at the current car value threshold under the existing scheme of €24,000, regardless of the cost of the car. Cars in Category D/E will receive allowances subject to a car cost limit of €12,000 or 50% of the cost of the car, if lower. Cars in Category F/G will not qualify for capital allowances.

Capital Allowances for Energy-Efficient Equipment

Finance Act 2008 introduced a new incentive for the provision of certain energy-efficient equipment for use in a company’s trade. The equipment must be approved and listed by the Minister for Communications, Energy and Natural Resources. Accelerated capital allowances of 100% of the capital expenditure incurred can be claimed for the year in which the equipment is provided and used. The new scheme will run to the end of 2014.

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