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What are Capital Allowances? 

What are Capital Allowances? 

What Is It? 

A Capital Allowance is a tax deductible allowance available to a company on the purchase of qualifying assets. 

Who is it for? 

Companies in the UK. It may be claimed on most assets purchased for use in the business, ranging from equipment and research costs, to expenses for building renovations. 

How does it work? 

You can deduct some or all of the value of the qualifying assets from your profits before you pay tax. 

The annual investment allowance which provides 100% tax deduction on qualifying asset on spending up to £1 million each year has been extended by the Government until 1 January 2022. 

This provides an excellent opportunity to utilise 100% tax deduction on qualifying asset purchases, saving corporate tax for the company. 

What should I do next? 

If you would like advice on Capital Allowance, please contact Charlotte Gage, our Business Tax specialist.

First published 25 November 2020
Last Updated 25 November 2020

25 November 2020
First published. 

Find out more about Ian Timms

Ian Timms

Ian Timms

Ian is a Partner and the Head of Business Tax at Critchleys LLP.