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How do Capital Allowances Work?

Capital Allowances are not a type of tax ‘loophole’. They are instead a legitimate form of tax relief designed to encourage investment in business.

Capital Allowances are generally calculated at 18% or 8% per annum of the reducing balance of the expenditure,  dependent on the type of asset for which a claim has been submitted.

Using Capital Allowances, you can deduct the cost of qualifying assets from your taxable profits. The tax relief is usually spread over a number of years – providing a form of structured depreciation. 100% relief for the cost of plant and machinery may, however, be available at the outset by virtue of the special rules for:

Full 100% relief may also be available for certain other types of expenditure by way of:

If you would like to find out more about how Capital Allowances could save your business money; call us on 01423 567818, or click here to make an enquiry.