Capital Allowances Act 2001 Schedule A1 Part 2

Giving Effect to First-Year Tax Credits

Schedule A1 Part 2 establishes the mechanism by which first-year tax credits are actually given effect, setting out how companies claim and receive these credits in practice.

• First-year tax credits arise when a company incurs qualifying first-year allowance expenditure but cannot fully use the allowance because it has insufficient taxable profits
• The tax credit is claimed through the company's tax return and is given effect by HMRC as a payment to the company or by setting it against other tax liabilities
• The provisions ensure that the credit mechanism operates in a structured manner, integrating with the wider corporation tax self-assessment framework
• These rules were amended by Finance Act 2019, section 33(1)(c), which updated the operation of first-year tax credits

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