½Û×ÓÊÓƵ

Capital allowances ― general requirements

Produced by a Tolley Owner-Managed Businesses expert
Owner-Managed Businesses
Guidance

Capital allowances ― general requirements

Produced by a Tolley Owner-Managed Businesses expert
Owner-Managed Businesses
Guidance
imgtext

In the broadest sense, capital allowances are a form of tax-approved depreciation. Depreciation, as calculated under GAAP, is not an allowable deduction in computing the profits of a trade chargeable to income tax or corporation tax because it is an item of a capital nature. See the Capital vs revenue expenditure guidance note.

Instead, relief is given by treating the capital allowances as an expense to be deducted when arriving at the taxable trading profits. Likewise, any charges are treated as taxable receipts.

The relevant legislation is set out in the Capital Allowances Act 2001.

Types of capital allowances

Capital allowances are only available for a limited range of assets, each with a separate set of rules, the main ones are:

  1. •

    plant and machinery including cars, see the What is plant and machinery? and Capital allowances on cars guidance notes

  2. •

    integral features and long-life assets, see the Special rate pool and long life assets guidance note

  3. •

    research and development facilities, see the Research and development tax relief ― capital expenditure guidance note

  4. •

    structures

Continue reading the full document
To gain access to additional expert tax guidance, workflow tools, and tax research, register for a free trial of Tolley+â„¢
Powered by

Popular Articles

Taxation of dividend income

Taxation of dividend incomeIntroductionA dividend is a distribution of profit by a company to its shareholders.A dividend is not only a payment in cash. It can be the issue of new shares in exchange for forfeiting the right to a cash payment (a stock dividend). For more detail, see the Cash

14 Jul 2020 13:48 | Produced by Tolley Read more Read more

Subsistence expenses

Subsistence expensesIntroductionSubsistence is the amount incurred as a consequence of business travel. Typically it relates to accommodation and meal costs incurred. These amounts are allowed because they are associated with the necessary travel which is not to a permanent workplace. See the Travel

14 Jul 2020 13:43 | Produced by Tolley in association with Philip Rutherford Read more Read more

Fuel-related payments / mileage payments

Fuel-related payments / mileage paymentsIntroductionMost employers will make payments to employees in relation to business travel. Among the most common payments in relation to business travel are fuel and mileage payments. If an employer does not reimburse these amounts, then the employee will be

14 Jul 2020 11:46 | Produced by Tolley in association with Philip Rutherford Read more Read more