What are capital allowances?

Capital allowances are a way of obtaining tax relief on capital expenditure. This is valuable to your business since accounts depreciation is not tax deductible.
The allowances are treated as a tax deductible expense and thus reduce taxable profits.
Capital allowances are not just available against capital expenditure incurred from the date your business starts. Capital expenditure incurred prior to your business starting may also qualify for tax relief.

Capital allowances offer very significant tax savings but the process is complex and technical.
We make your life easy by managing your case from start to finish.
We apply our expertise to ensure you obtain the maximum tax relief available on your capital expenditure.

Does all capital expenditure qualify for capital allowances?

No. The expenditure must be on a specific type of asset. Generally you must own the asset on which the capital allowances are claimed. In other words if you have hired or leased the asset, capital allowances may not be claimed, however you may obtain tax relief on the rental costs as revenue expenditure.

Capital allowances can be claimed by sole traders, partnerships and companies. Capital allowances are a HMRC endorsed form of tax relief.

How do I find out what types of expenditure qualify?

Capital allowances are typically available for:

• Equipment (e.g. computers, telecommunications, printers)
• Integral features (e.g. air conditioning, electrical wiring)
• Furniture
• Machinery
• Vehicles

However, they are also available on a range of other items and features which are often overlooked by business and their advisers when identifying capital allowances.

How do I claim capital allowances?

Capital allowances must be claimed in your Self Assessment tax return and they must normally be claimed by 12 months after the 31 January filing deadline for the return.