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  • Capital Allowances: in detail

    If you run a business and are paying tax in the UK, you may be eligible for capital allowances relief if you operate your business as an individual, partnership, company, trustee or overseas investor affected by the non-resident landlord scheme. Businesses from all industries and market sectors may be eligible, such as tech, education, health, hospitality, leisure, construction and many more.

    Reduce your tax bill

    Capital allowances afford you relief from your tax bill whilst not affecting your turnover.

    Obtain relief for your spending

    Capital allowances are generally the only form of tax relief against capital expenditure (including some of the costs of acquisition of commercial property).

    Grow your business

    Perhaps you may be thinking that a proposed purchase of an expensive piece of equipment should be held back to next year to benefit your cash flow. If tax relief is given on the value of that purchase, would you still have that same concern?

    How can we help?

    Capital allowances compensate for depreciation not normally being deductible for tax purposes. Qualifying activities for capital allowances are:

    • A trade
    • A property business (UK or overseas)
    • A furnished holiday lettings business (UK or within the European Economic Area)
    • A profession or vocation
    • An employment or office
    • Special leasing of plant and machinery
    • Managing the investments of a company with investment business
    • A concern in mines or transport undertakings

    Capital allowances apply whether you own the property as an investment, or it is used in your trading business.

    The scope of definitions across all areas is extremely broad, which makes it easy for businesses to overlook certain types of expenditure that are in fact eligible.

    It is common however for businesses to underestimate the proportion of their capital expenditure that qualifies for capital allowances. This means you may be paying too much tax.

    There are many situations that give rise to eligible capital expenditure. Generally speaking, a business’ expenditure on plant and machinery will qualify for capital allowances. This tends to be well-known by accountants and business owners.

    However, the potential for relief however is much broader. Capital allowances apply to a wider range of business assets, with companies yet to take full advantage of this wider application and financial benefit.

    Not only this, on the purchase of a commercial property, a further series of rules apply which may even restrict the ability to claim for capital allowances on any exiting plant and machinery within the building. This can often be a shock to purchasers but also can have a bearing on agreeing commercial terms within the sale and purchase agreement. Ensuring that you have full support during this process of acquisition can ensure that both a) any potential pitfalls are identified and mitigated and b) you are paying fair market price for the purchase of the building.

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    Please provide as much detail as possible in regards to the reason for your enquiry so our tax advisers can prepare and tailor their response to reflect your needs. We will endeavour to - respond / call you back - to discuss your enquiry and you will not be charged for this time.

  • This field is for validation purposes and should be left unchanged.