Wear and tear allowances and capital allowances

By Tolley
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The following Corporation Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Wear and tear allowances and capital allowances
  • Outline
  • Wear and tear allowance

Outline

A property investor receiving rental income can't deduct from that rental income the cost of the capital expenditure in buying the property, or indeed any alterations thereto, any installation of fixed assets, etc. However, relief may be available for certain types of expenditure in commercial property under the capital allowances regime. Capital allowances can be given in a number of ways, namely:

  • plant and machinery capital allowances (including a separate pool for certain fixtures integral to a building, which attract a 10% WDA) – see the Integral features guidance note
  • annual investment allowance – see the Entitlement to plant and machinery allowances guidance note
  • industrial buildings allowances and agricultural buildings allowances (although these will no longer exist after April 2011)

An allowance may also be due for:

    More on Tax computations: