You can claim capital allowances when you buy assets that you keep to use in your business, e.g.
These are known as plant and machinery.
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You can deduct some or all of the value of the item from your profits before you pay tax.
If you’re a sole trader or partner and have an income of £150,000 or less a year, you may be able to use a simpler system called cash basis instead.
In most cases, the value is what you paid for the item. Use the market value (the amount you’d expect to sell it for) instead if:
You can claim for the cost of things that aren’t classed as business assets in a different way. These includes:
Claim these costs as business expenses if you’re a sole trader or partner, or deduct from your profits as a business cost if you’re a limited company.
As well as plant and machinery, you can also claim capital allowances for:
You can only claim for items in residential property if your business qualifies as a furnished holiday lettings business. In each year the property must be:
You can claim capital allowances on items that you keep to use in your business - these are known as ‘plant and machinery’.
In most cases you can deduct the full cost of items used and kept in your business. This is claimed from your profits before tax using AIA (annual investment allowance).
You can’t claim capital allowances on:
Plant and machinery includes:
Integral features are:
You can claim for fixtures, e.g.:
You can claim if you rent or own the building, but be aware that the person who bought the item can claim.
When you buy a building from a previous business owner you can only claim for integral features and fixtures that they claimed for.
You must first agree the value of the fixtures with the seller. If this is not first agreed you couldn’t claim for them.
You can deduct the full value of an item that qualifies for AIA from your profits before tax.
If you sell the item after claiming AIA you may need to pay tax.
The AIA amount is £200,000. This is for 12-month periods from 1 January 2016.
Between April 2008 and January 2016 the AIA amount changed several times.
If the AIA changed in the period you’re claiming for, you need to adjust the claimable amount accordingly.
| Sole traders/partners | Limited companies | AIA |
| From 1 January 2016 | From 1 January 2016 | £200,000 |
| 6 April 2014 - 31 December 2015 | 1 April 2014 - 31 December 2015 | £500,000 |
| 1 January 2013 - 5 April 2014 | 1 January 2013 - 31 March 2014 | £250,000 |
| 6 April 2012 - 31 December 2012 | 1 April 2012 - 31 December 2012 | £25,000 |
| 6 April 2010 - 5 April 2012 | 1 April 2010 - 31 March 2012 | £100,000 |
| 6 April 2008 - 5 April 2010 | 1 April 2008 - 31 March 2010 | £50,000 |
Note: A new allowance is allocated for each accounting period and you will need to adjust your AIA if your accounting period is more or less than 12 months.
You can only claim AIA in the period you bought the item.
The date you bought it is:
If you buy something under a HP (hire purchase) contract you can claim for the payments you haven’t made yet when you start using the item. You can’t claim on the interest payments.
Note: If your business closes you can’t claim AIA for items bought in the final accounting period.
You don’t have to claim the full cost if you have low profits you can write down the allowance or claim part of the cost as AIA.
Items that are used outside your business can only be claimed for the time they are used I your business. For example, if you buy a laptop for £800. You use it outside your business for half of the time. The amount of capital allowances you can claim is reduced by 50%.
If you’re a sole trader or a partner and you have more than one business or trade, each business will usually receive an AIA.
You only get one AIA if the businesses are both:
If the same person controls 2 or more limited companies they only get one AIA between them. They can choose how to share the AIA.