Private Client Tax
Corporate & Business Tax
VAT Advice
Tax Investigations
Property Tax
Services for professional advisers
Knowledge Centre
News & Events
Careers and Opportunities
About ETC Tax
Contact Us
Full contact details available here.
Capital Allowances
Making the complex simple
If you run a business and are paying tax in the UK, you may be eligible for capital allowances.
Capital allowances are available to those operating a business as an individual, partnership, company, trustee or overseas investor registered under the non-resident landlord scheme.
Capital allowances compensate for depreciation not normally being deductible for tax purposes. Qualifying activities for capital allowances are:
• A trade
• A property business (UK or overseas)
• A furnished holiday lettings business (UK or within the European Economic Area)
• A profession or vocation
• An employment or office
• Special leasing of plant and machinery
• Managing the investments of a company with investment business
The scope of where capital allowances may apply is extremely broad, which makes it easy for businesses to overlook certain types of expenditure that are in fact eligible. It is therefore common however for businesses to underestimate the proportion of their capital expenditure that qualifies for capital allowances, meaning you may be paying too much tax.
It is also important to review the capital allowances position when purchasing a commercial property, as there are a specific set of rules which apply which may restrict your ability to claim for capital allowances on any existing plant and machinery within the building. This may come as a shock after the event, but if you know about this in advance of any purchase you can agree appropriate commercial terms; and we can assist with this.
Note: although capital allowances have a wide application and all business owners can benefit from them (even those who don’t own property), at ETC Tax we most often see them discussed in the context of property transactions, hence including them here.