Capital Allowances

Capital Allowances provide tax relief for qualifying capital expenditure reducing the amount of taxable profits for businesses whether the business is incorporated or not.

Over recent years the main rate of relief available for qualifying capital expenditure has reduced (from 25% ten years ago to 18% now).  This means it is important that a review of qualifying expenditure is carried out in detail.  The introduction of a 100% Annual Investment Allowance has, for most businesses, been very generous with, over the last couple of years, the first £500,000 of expenditure attracting 100% relief.  The limit has however, recently been reduced to £200,000 and whilst this is still above the annual expenditure of many businesses, it will have a considerable impact for some.

Our tax specialists can advise you as to whether expenditure would be considered to be capital or can be treated as normal revenue expenditure.  In addition, if we are contacted before the expenditure is incurred, we can advise, not only on the tax treatment, but also on the timing of the expenditure and alternative options which may be more tax efficient.

For large construction projects (e.g. the building of a new factory) we work closely with a team of experts who can advise on which elements of the build would qualify for capital allowances but also on other items which may attract other enhanced capital allowances increasing the tax relief obtained.  In addition they can also advise on potential capital allowance claims for existing commercial premises.