Capital allowances ― overview

By Tolley
  • (Updated for Budget 2020)
Capital allowances ― overview

The following Owner-Managed Businesses guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Capital allowances ― overview
  • Definition of capital allowances
  • Summary of rates ― capital allowances
  • Links to articles ― capital allowances

Definition of capital allowances

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 chargeable profits of a trade 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.

CTA 2009, s 48
Summary of rates ― capital allowances

The following table summarises the main capital allowances available, the rate of the allowance and if relevant any important dates or points to note, for further details including any relevant qualifying conditions or restrictions see the relevant guidance note as linked in the table.

DescriptionRelevant assetsRateGuidance notesNotes
Annual investment allowancePlant and machinery, integral features and long life assets but not cars100%

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