capital allowances

capital allowances Allowances against UK income tax or corporation tax available to a business, sole trader, partnership, or limited company that has spent capital on plant and machinery used in the business. Capital allowances are also given on industrial buildings and some agricultural and commercial buildings. The level of allowance varies according to the different categories of asset. Plant and machinery qualifies for a standard 18% writing-down allowance. Certain first-year allowances are from time to time made previously available to smaller businesses that invest in specified assets, and an all-purpose Annual Investment Allowance was introduced in April 2008. An allowance of 8% is also available for certain long-life assets expected to last for 25 years or more. The allowances are treated as an expense in the computation of taxable profit and the capital allowance period reflects the period during which the accounts are prepared. If a business’s capital allowances exceed its profit, it may obtain relief for the loss this generates by applying the usual loss relief rules.

http://www.hmrc.gov.uk/manuals/camanual/Index.htm

• Details of capital allowances from the HMRC website

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