When you buy an asset for use in your business e.g. cars, plant & machinery, fixtures & fittings and integral features of commercial buildings, HMRC allows you to deduct a proportion of the expenditure to reduce the taxable profit of the business.
This allows your business to claim tax relief for the reduction in value of qualifying assets that you buy and own for business use.
Capital Allowances are available to unincorporated business (sole traders and partnerships), incorporated businesses (companies and Limited Liability Partnerships) and other organisations liable for Corporation Tax.
There are a number of rates of tax relief available depending on the amount spent and type of asset.
Main rate pool
Add the value of all plant and machinery you’ve bought to the main rate pool, unless they’re in:
- the special rate pool
- a single asset pool (for example, because you have chosen to treat them as ‘short life’ assets or you’ve used them outside your business)
and claim an annual rate of 18%.
Special rate pool
The lower annual rate of 8% is claimed on:
- integral features within commercial buildings
- items with a long life (greater than 25 years)
- thermal insulation of buildings
- cars with CO2 emissions of more than 130g/km
Annual Investment Allowance
A business may claim a 100% deduction for eligible capital expenditure of up to £200,000 per year (although only one allowance is available between any 51% group of companies). This allowance may be used in either or both of the above pools. Once the allowance is used up the above rates are used on the remaining expenditure.
What Beavis Morgan can do for you and your business:
- As part of the accounting and tax compliance process we can analyse capital expenditure and calculate the optimum Capital Allowance claim for your business.
- Advise on planning for optimum timing of purchase of capital assets to give the maximum Capital Allowance claim.
- Prepare and submit Capital Allowance claims relating to the purchase and construction of commercial premises.
- Ensure maximisation of claims relating to the Annual Investment Allowance and other enhanced allowances.
- Capital Allowances
- Seed Enterprise Investment Scheme
- Research and Development
- Patent Box
- Creative Sector Tax Reliefs
- Enterprise Management Incentive ("EMI") Options and Entrepreneurs' Relief
- Capital Allowances: Embedded Plant & Machinery