Jurisdiction(s):
United Kingdom

Related legal acts

Key definition

Capital allowance definition

What does Capital allowance mean? A capital allowance is tax relief that lets a business deduct qualifying capital expenditure from trading profits when computing corporation tax (companies) or income tax (sole traders and partnerships), since capital costs are not normally revenue‑deductible. In practice it is a statutory regime: in the UK (including England & Wales, Scotland and Northern Ireland) under the Capital Allowances Act 2001 and Finance Acts; in Ireland under the Taxes Consolidation Act 1997. Key features include: - Relief for plant and machinery (including integral features and most equipment), certain cars, and structures and buildings. - Mechanisms such as Annual Investment Allowance (AIA), writing‑down allowances...

Capital allowances due diligence on UK property transactions: essential pre-contract enquiries, pooling and fixed value rules, fixtures elections, tenant contributions and structures and buildings allowances

Published by a LexisNexis Tax expert

Practice notes

FORTHCOMING CHANGES

At Budget 2025, the government set out measures to be legislated in Finance Bill 2026, namely:

a reduction in the writing‑down allowance rate on main pool plant and machinery from 18% to 14%, effective 1 April 2026 for corporation tax and 6 April 2026 for income tax—affecting companies and unincorporated firms with main rate pools, covering expenditure that does not qualify for, or predates, first‑year allowances such as the super‑deduction and full expensing
a new 40% first‑year allowance for qualifying main rate expenditure incurred from 1 January 2026, with fewer restrictions than other FYAs—mainly helping spend not eligible for the £1m annual investment allowance or existing FYAs (eg full expensing); available to all businesses, and covering assets used for leasing (excluding overseas leasing), but excluding cars and second‑hand assets
a one‑year extension of the 100% green first‑year allowances for qualifying spend on zero‑emission cars and electric vehicle charging points to 31 March 2027 for corporation tax and 5 April 2027 for income tax

This Practice Note covers Capital Allowance due diligence before Contract on property transfers, including the grant of a new Interest (eg a lease) and the purchase of an existing lease or freehold...

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Martin Wilson

A former Chartered Accountant, now retired, Martin is the author of more than a dozen books on capital allowances, including Bloomsbury Professional's Capital Allowances: Transactions and Planning. Martin co-founded The Capital Allowances Partnership Limited after 15 years with leading accounting firms, where he headed up the specialist capital allowances practice. He has personally advised some of the UK's leading companies, as well as a myriad of private investors, both in the UK and overseas....

Steven Bone

Gateley Legal

Steven is a tax-qualified chartered surveyor. He has specialised in capital allowances for more than 25 years, and more recently land remediation relief and R&D tax incentives. In his role as director at Gateley Capitus, Steven works with businesses that are buying, building or refurbishing commercial property, cleaning-up contaminated land and buildings or undertaking R&D activity to help them pay the right amount of tax by optimising the tax reliefs available to them.Prior to joining Gateley Capitus, Steven held senior roles in the Big 4, specialist boutique and national mid-tier accountancy firms. He is a fellow of the Royal Institution of Chartered Surveyors (RICS) and the Association of Taxation Technicians.Alongside daily practice, Steven is a tax incentives writer and speaker for property investment and innovation activity. ...

Web page updated on 21/05/2026

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