What is First Year Allowance (FYA)?

First Year Allowance (FYA) provides 100% tax relief on the full cost of qualifying assets in the year of purchase. Unlike AIA (which has a £1 million annual cap), FYA has no monetary limit — you can claim 100% relief on any amount of qualifying expenditure. FYA applies specifically to designated green and energy-efficient technologies.

What assets qualify for 100% First Year Allowance?

Qualifying assets for 100% FYA include: zero-emission cars (new, registered from April 2021), zero-emission goods vehicles, electric vehicle charging points (new, installed from April 2023), energy-efficient boilers meeting qualifying criteria, energy-efficient refrigeration, qualifying energy-efficient motors and drives, and certain other technologies on the Energy Technology List.

Do zero-emission cars qualify for 100% FYA?

Yes. New zero-emission cars (those with 0g/km CO2 emissions) registered on or after 6 April 2021 qualify for 100% First Year Allowance. The full purchase price is deductible in the year of purchase. This compares favourably to petrol/diesel cars (under 50g/km: 18% WDA; over 50g/km: 6% WDA).

What is the Energy Technology List for FYA?

The Energy Technology List (ETL) is maintained by the Department for Energy Security and Net Zero. Products on this list that meet specified efficiency criteria qualify for 100% FYA. Categories include: motors, drives, boilers, refrigeration, combined heat and power systems, lighting, solar photovoltaic panels (over 50kW threshold), compressed air equipment, and more. Check the official ETL for current qualifying products.

How does FYA compare to AIA?

Both FYA and AIA give 100% relief in year one, but FYA has no monetary cap whereas AIA is limited to £1 million per year. AIA applies to any qualifying plant and machinery up to £1m. FYA applies only to designated green assets but with no upper limit on the amount. For assets eligible for both, use FYA to preserve the AIA limit for other purchases.

How does FYA compare to standard WDA for a car?

Standard (non-qualifying) cars use WDA: 18% (CO2 50g/km or less) or 6% (CO2 above 50g/km). A £50,000 car with 18% WDA gives £9,000 relief in year one. The same car as a qualifying zero-emission vehicle with 100% FYA gives £50,000 relief in year one — a £41,000 greater deduction, saving £10,250 more tax at 25% corporation tax rate in year one.

Does FYA apply to second-hand assets?

No. FYA for zero-emission vehicles and energy-efficient equipment applies only to NEW assets. Second-hand or used qualifying assets do not qualify for FYA — they would use standard WDA rates (18% for main pool assets). The asset must be new and unused when purchased by the claimant.

Can sole traders and partnerships claim FYA?

Yes. First Year Allowances are available to all businesses: sole traders, partnerships, and companies. Unlike Full Expensing (companies only), FYA is available to unincorporated businesses as well. This makes FYA particularly valuable for self-employed individuals purchasing qualifying zero-emission vehicles or energy-efficient equipment.

What is the tax saving from FYA vs no FYA?

FYA tax saving in year one = full cost x tax rate. For example, £60,000 zero-emission car at 25% tax = £15,000 saved in year one. With standard 18% WDA, year one saving = £60,000 x 18% x 25% = £2,700. FYA provides £12,300 more tax relief in year one. Over time, the total relief is identical — only the timing differs.

What happens to an asset after FYA is claimed?

After 100% FYA, the asset has a zero written-down value in the pool. On disposal, the full disposal proceeds are treated as a pool addition (balancing charge) since the WDA pool balance is nil. You will pay tax on the disposal proceeds in the year of disposal. This is the trade-off for claiming 100% relief upfront.

Is FYA available for electric vehicle charging points in 2025/26?

Yes. New electric vehicle charging equipment (charge points) qualifies for 100% FYA from April 2023. This applies to new charge points installed for business use. The charge point must be new (not second-hand). This is available for companies, sole traders, and partnerships alike.

What is the years-to-recover calculation for WDA?

Under 18% WDA (reducing balance), you recover 50% of an asset's cost in approximately 3.5 years, 75% in about 7 years, and 90% in about 12 years. Full recovery never technically occurs. Under FYA, 100% is recovered in year one. Our calculator shows the number of years under WDA to reach the same total relief as FYA provides immediately.

What is the qualifying condition for zero-emission cars?

A zero-emission car must have: CO2 emissions of 0g/km (tested under the WLTP standard), be new (not second-hand), and be a car (not a van or other vehicle). Company cars provided to employees that are zero-emission also qualify. The car can be purchased outright or under a hire purchase agreement — leased cars are not eligible.

How does FYA affect my tax computation?

FYA is shown in the capital allowances section of your tax computation (CT600 for companies, self-assessment for individuals). The full cost is claimed as FYA, reducing taxable profits by the full amount in the year of purchase. The asset is then shown with a nil written-down value in subsequent years.

Can I claim FYA and AIA on the same asset?

No. You claim either FYA or AIA — not both on the same asset. For qualifying zero-emission vehicles and energy-efficient equipment, FYA should be preferred as it preserves your AIA limit for other assets. Only claim AIA on an asset if it does not qualify for FYA.

What is the future of FYA for zero-emission vehicles?

The 100% FYA for zero-emission cars and goods vehicles is currently available with no specified end date, reflecting the government's policy of encouraging adoption of zero-emission transport for businesses. However, tax policies can change — check HMRC guidance for current qualifying conditions before making purchasing decisions.

Does FYA apply to solar panels?

Solar photovoltaic (PV) panels may qualify for 100% FYA if they are on the Energy Technology List and meet the qualifying conditions. Generally, commercial-scale solar installations (typically over 50kW) that appear on the ETL qualify. Smaller domestic-scale panels and panels not on the ETL do not qualify for FYA but may qualify for AIA.

How do I calculate years to recover cost under WDA?

Under 18% WDA, remaining pool balance after n years = cost x (1 - 0.18)^n = cost x 0.82^n. Relief claimed = cost minus remaining balance. To find years to 90% recovery: 0.82^n = 0.10, so n = ln(0.10)/ln(0.82) ≈ 11.7 years. FYA recovers 100% in year 1. The gap narrows over time but FYA always provides more relief in the early years.

What is the benefit of FYA for zero-emission goods vehicles?

Zero-emission goods vehicles (electric vans, lorries) qualify for 100% FYA in year one. This means the full purchase cost is deductible against profits in the purchase year, significantly reducing the tax bill. The immediate relief helps offset the typically higher purchase price of electric commercial vehicles compared to equivalent diesel models.

Can a business lease a qualifying asset and still claim FYA?

No. Only the asset owner can claim capital allowances. If you lease (operating lease) a zero-emission vehicle, the lessor (fleet company) claims the FYA. Your deduction is the lease rentals. To claim FYA, you must own the asset outright or through hire purchase (finance lease), where you are treated as the economic owner.

What records do I need to claim FYA?

Keep: the purchase invoice showing the asset is new; the registration certificate or technical specification showing zero CO2 emissions (for vehicles); evidence the product is on the Energy Technology List (for energy-efficient equipment); date of purchase; and the capital allowances claim in your tax return. HMRC can challenge FYA claims if the qualifying conditions are not clearly evidenced.

How is the additional year-one benefit of FYA calculated?

Additional year-one benefit = FYA tax saving minus WDA year-one tax saving. FYA saving = cost x tax rate. WDA saving = cost x WDA rate x tax rate. For a main pool asset: additional benefit = cost x (1 - 0.18) x tax rate = cost x 0.82 x tax rate. This shows the extra cash saved in year one by claiming FYA rather than WDA.

Is FYA available for businesses with small profits?

FYA can create or increase a trading loss if it exceeds your profits. For companies, such losses can be carried back one year or forward indefinitely. For sole traders, losses can be offset against other income in the same or adjacent years. There is no restriction on using FYA even if it creates a loss — however, the cash benefit depends on having sufficient taxable profits to use the relief.

What is Full Expensing for companies and how is it different from FYA?

Full Expensing (available to companies from April 2023) provides 100% first-year allowance on main pool plant and machinery with no cap — similar to FYA but available to any qualifying main pool assets, not just green technology. Full Expensing does not apply to cars or to sole traders/partnerships. FYA specifically targets green assets and is available to all business types.

What is the difference between FYA and 50% first-year allowance?

The 100% FYA applies to qualifying zero-emission vehicles and energy-efficient equipment. The 50% first-year allowance (under Full Expensing for companies) applies to special rate pool assets (integral features, long-life assets). The 50% allowance is less generous but still provides faster relief than the standard 6% WDA on special rate pool assets. Only companies can use Full Expensing 50% FYA; individuals use standard WDA on these assets.

Why is FYA particularly good for high-tax-rate businesses?

The monetary benefit of FYA is directly proportional to your tax rate. At 25% corporation tax, a £100,000 qualifying asset saves £25,000 tax in year one (vs £4,500 with 18% WDA). At 40% income tax (higher rate individual), the same asset saves £40,000 in year one. The higher your tax rate, the larger the absolute benefit of front-loading the deduction via FYA.

Are there any FYA restrictions for associated companies?

There are no FYA sharing restrictions between associated companies — unlike AIA (where connected businesses share a £1 million limit), each company in a group can claim 100% FYA on its own qualifying expenditure independently. This makes FYA particularly valuable in group structures investing in qualifying green assets across multiple entities.

Does claiming FYA affect my company's balance sheet?

FYA is a tax deduction, not an accounting entry. In your accounts (for financial reporting), the asset is still depreciated over its useful economic life per accounting standards (e.g. FRS102). The difference between accounting depreciation and the FYA deduction creates a timing difference in deferred tax. Your balance sheet shows the asset at depreciated cost, but your tax computation shows nil WDV (after FYA).

How does the HMRC Energy Technology List work?

The Energy Technology List (ETL) is a database of energy-efficient products certified by independent third parties and approved by the government. To qualify for FYA under the ETL, a product must: appear on the current ETL, meet the minimum energy efficiency criteria for its category, be new (not second-hand), and be used in the business. The ETL is regularly updated — always check before purchase to confirm current eligibility.

What is the benefit of our First Year Allowance Calculator?

Our FYA calculator instantly shows: full cost allowable under FYA, tax saving this year under FYA, what the saving would be under WDA instead, the additional year-one benefit of FYA, and how many years it would take under WDA to recover the same amount of tax relief as FYA provides immediately. This helps you quantify the real financial benefit of choosing a qualifying green asset.

First Year Allowance Calculator 2025/26

Calculate 100% FYA on qualifying zero-emission vehicles and energy-efficient assets. Full relief in year one — no cap. Compare to standard WDA to see your extra year-one benefit.

100% First Year Allowance Calculator

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First Year Allowance Explained

The First Year Allowance (FYA) provides 100% tax relief on the full cost of qualifying green assets in the year of purchase. Unlike the Annual Investment Allowance (limited to £1 million/year), the FYA has no monetary cap — you can claim 100% relief on any amount of qualifying expenditure.

Key Qualifying Assets

The most common qualifying assets for 100% FYA are: zero-emission cars (CO2 of 0g/km, new, registered from April 2021), zero-emission goods vehicles, and new electric vehicle charging points. Energy-efficient equipment on the official Energy Technology List (ETL) also qualifies — check the ETL before purchase.

FYA vs WDA

A qualifying zero-emission car purchased for £50,000: FYA gives £50,000 deduction in year one (£12,500 tax saving at 25%). Standard 18% WDA gives only £9,000 in year one (£2,250 saving). The FYA provides £10,250 more cash in year one — even though total relief over the car's life is identical.

First Year Allowance Calculator 2025/26

100% First Year Allowance Calculator

First Year Allowance Explained

Key Qualifying Assets

FYA vs WDA

Frequently Asked Questions