Capital allowances: the basics
Introduction
As a business you can claim tax allowances, called capital allowances, on certain purchases or investments. This means you can deduct a proportion of these costs from your taxable profits and reduce your tax bill.
Capital allowances are available on plant and machinery, buildings - including converting space above commercial premises to flats for renting - and research and development.
The amount of the allowance depends on what you're claiming for. In some cases, the rates are different in the year you make the purchase from those in subsequent years.
This guide will tell you what purchases or investments qualify for a capital allowance, how much you can claim and the simplest way to make your claim.
Note that this guide is aimed at businesses with relatively simple tax affairs. Therefore, it does not cover the claiming of capital allowances by groups of companies, associated companies or persons operating several businesses.
Also note that it does not cover the transitional provisions that apply to individuals or businesses with accounting years that start before 1 April 2008 for corporation tax, that start before 6 April 2008 for income tax or are for a period other than 12 months in duration.
For more guidance on this point, you should contact your tax office, or read the help sheets that accompany your tax return.
Subjects covered in this guide
- Introduction
- Capital allowances on plant and machinery
- Capital allowances on plant and machinery - special cases
- Calculating your claim for capital allowances for plant and machinery
- Capital allowances on buildings
- Capital allowances for research and development
- Claiming capital allowances
- Here's how I made the most of tax allowances and credits available for research and development
