Capital goods scheme (CGS) ― what is covered?

Produced by a Tolley Value Added Tax expert

Value Added Tax

Guidance

This guidance note looks at the kinds of asset that are covered by the capital goods scheme (CGS).

For an overview of the CGS more broadly, see the Capital goods scheme (CGS) ― overview guidance note.

In-depth commentary on the CGS can be found in De Voil Indirect Tax Service V3.470.

What kinds of asset are covered by the capital goods scheme?

The CGS does not apply to all kinds of asset. In fact, it covers a relatively limited range of assets. These assets are often referred to as ‘capital items’. Capital items fall into three broad categories:

•
land and buildings valued at £250,000 or more (excluding VAT)
•
computers valued at £50,000 or more (excluding VAT)
•
aircraft, ships, boats, and other vessels valued at £50,000 or more (excluding VAT)

As a general rule, the value of the capital expenditure is normally the expenditure which has been capitalised for accounting purposes, but this is not always the case (see below).

SI 1995/2518, reg 113; Notice 706/2, para

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