Capital allowances

Business: Business Tax

    You may be able to reduce your business’ tax bill to take account of money it spends on assets by claiming capital allowances.

    You can claim capital allowances if you’’re running a limited company or if you’’re self-employed.

    Get basic information on capital allowances from HM Revenue & Customs, as well as detailed guides on claiming capital allowances for:

    • plant and machinery
    • buildings and renovations

    Spending money on things like this is called ‘capital expenditure’.

    You must not claim capital expenditure as business expenses.

    First year allowances

    First year allowances let you claim 100% of the cost of specific assets in the tax year you buy them. This includes:

    • water efficient technologies
    • energy saving products

    How to claim

    Sole traders and business partnerships

    You can’’t claim capital allowances on a vehicle you’’re claiming simplified expenses for.

    If you’re a sole trader, you must claim capital allowances in your Self Assessment tax return.

    If you’re a partnership, you must claim in the partnership’s Self Assessment tax return, not any of the individual partners’ returns.

    Limited companies

    If you’re a limited company, you must make a claim in your Company Tax Return.

    You must include a separate capital allowances calculation as part of your Company Tax Return.

    Claim capital allowances to reduce your business’ tax bill to take account of money you’ve spent on assets – plant, machinery, buildings, renovations, first year allowances, water efficiency, energy saving