285C Acceleration of wear and tear allowances for gas vehicles and refuelling equipment

Summary

This section provides for an accelerated wear and tear allowance of 100% in respect of capital expenditure incurred by persons on new gas-powered vehicles and new refuelling equipment used for the purposes of carrying on a trade. Finance Act 2021 introduced some amendments to the section to include hydrogen fuelled vehicles and related refuelling equipment in the scheme of accelerated allowances. Additionally, the termination date for incurring qualifying expenditure was extended to 31 December 2024. The incentive now runs from 1 January 2019 until 31 December 2024. Only expenditure incurred during this period can qualify for the 100% wear and tear allowance. Private passenger motor cars are excluded from the incentive. However, capital expenditure incurred on taxis and passenger motor cars for short term hire to the members of the public may qualify for the accelerated allowance.

Details

Definitions

(1) “biogas” is defined as gas produced from biomass.

“biomass” is defined as the biodegradable fraction of products, waste and residues from agriculture, forestry and related industries and industrial and municipal waste.

“CN code” means a Community subdivision to the combined nomenclature of the European Communities referred to in Article 1 of the Council Regulation (EEC) No. 2658/87 of 23 July 1987 as amended by Commission Regulation (EC) No. 2031/2001 of 6 August 2001.

“compressed natural gas” is defined as petroleum gases and other gaseous hydrocarbons in gaseous state falling within CN code 2711 21 00.

“gas refuelling station” is defined as a premises, or part of a premises, at which gaseous fuel or hydrogen fuel is supplied to a gas-powered vehicle.

“gas-powered vehicle” is defined as a mechanically propelled road vehicle which is fuelled by gaseous fuel or hydrogen fuel.

“gaseous fuel” is defined as compressed natural gas, liquefied natural gas or biogas.

“hydrogen” is defined as the chemical element falling within CN code 2804 10 00.

“hydrogen fuel” is defined as gaseous or cryogenic liquid hydrogen of a fuel quality that complies with ISO 14687:2019 or SAE J2719.

“liquefied natural gas” is defined as petroleum gases and other gaseous hydrocarbons in liquefied state falling within CN code 2711 11 00.

“pre-cooling device” is defined as equipment, which complies with ISO 19880-1:2020, used for the process of cooling hydrogen fuel prior to dispensing of the fuel.

“qualifying expenditure” is defined as capital expenditure incurred during the relevant period on the provision of qualifying refuelling equipment or qualifying vehicles.

“qualifying refuelling equipment” is defined as refuelling equipment, which is unused and not second-hand, installed at a gas refuelling station.

“qualifying vehicle” means a gas-powered vehicle which is unused and not second-hand, is constructed or adapted for the conveyance of goods or burden of any description, the haulage by road of other vehicles or the carriage of passengers. Private passenger motor cars cannot qualify for the accelerated wear and tear allowance under this section. Such vehicles are subject to the CO2 emissions regime in Part 11C. Vehicles used for the purpose of hire to, or the carriage of, members of the public in the ordinary course of a trade (e.g. taxis) may qualify.

“refuelling equipment” is defined as a storage tank for gaseous or hydrogen fuel, a compressor, pump, control or meter used for the purposes of refuelling gas-powered vehicles, a pre-cooling device, or equipment for supplying gaseous or hydrogen fuel to the fuel tank of a gas-powered vehicle.

“relevant period” is defined as the period commencing on or after 1 January 2019 and ending on 31 December 2024.

Wear and tear allowances

(2) This subsection applies the provisions of Chapter 2 of Part 9 so that when a “wear and tear” allowance is made under section 284 to a person in respect of capital expenditure incurred during the relevant period on a qualifying vehicle or qualifying refuelling equipment (as defined), the rate of allowance will be 100%. [Section 284 is the basic wear and tear allowances section for plant and machinery. Section 284(2)(ad) provides that, for capital expenditure incurred after 4 December 2002, the rate is 12.5%]. Subsection (2) of section 285C increases this rate to 100%.

(3) This subsection ensures that if relief is claimed on capital expenditure under either section 285A (acceleration of wear and tear allowances for certain energy-efficient equipment) or 286 (increased wear and tear allowances for taxis and cars for short-term hire) the same expenditure cannot qualify for the accelerated wear and tear allowance under section 285C.

Relevant Date: Finance Act 2021