First-Year Allowance

DEFINITION of 'First-Year Allowance'

A U.K. tax allowance that permits British corporations to claim on eligible plan or machinery purchases. The allowance can only be claimed during the first year of the equipment purchase. The allowance helps corporations offset a portion of their taxable profits and can help ease the strain on a company's cash flow. This allowance replaces a standard U.K. write-down allowance previously available to small and medium-sized businesses.

BREAKING DOWN 'First-Year Allowance'

The British government permits first-year allowances for different types of capital investments including computer and internet technology as well as energy-saving ("green") inputs. The allowable allowance can vary widely, between 6% and 100%.

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