Capital Allowances

Many businesses overlook capital allowances but they can make a huge difference to your tax planning and tax bills and therefore to your profits and cash flow. For more information on how we can help you with a range of advice on capital allowances in Wiltshire, please see below.

If you buy an asset – for example: a car, tools, machinery or other equipment for use in your business – you cannot deduct your expenditure on that asset from your trading profits. Instead, you may be able to claim a capital allowance for that expenditure.

Capital allowances are also available for certain building-related capital expenditure, for qualifying capital expenditure on qualifying research and development, for donations of used business assets to charity, and certain other capital expenditure.

The aim is to give tax relief for the reduction in value of qualifying assets that you buy and own for business use by letting you write off their cost against the taxable income of your business.

Capital allowances are available to sole traders, self-employed persons or partnerships, as well as companies and organisations liable for Corporation Tax.

Items that qualify for plant and machinery allowances

Tools, machinery, vehicles and other equipment you own (having bought them for your business) will generally qualify for plant and machinery allowances.

Some common examples include:

  • vans
  • cars
  • tools
  • furniture
  • computers
  • machinery
  • equipment

 

Annual Investment Allowance (AIA)

AIA is available for most businesses, including partnerships. It is not available for trustees or mixed partnerships (partnerships which are not made up entirely of individuals). Businesses can claim an AIA for capital expenditure incurred on most items of plant and machinery.

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