A guide to capital allowances for property owners

Capital allowances can be a valuable tool for reducing your tax bill.

They let you deduct the cost of specific property-related expenses, like plant, machinery, and certain fixtures, from your taxable profits.

If you have invested in commercial properties or made significant improvements, this can help you save.

Who can claim?

If you own income-generating property, you might qualify for capital allowances. This includes:

Commercial landlords renting out office spaces, shops, or warehouses
Investors purchasing commercial properties for refurbishment and future rental or sale

If you are unsure about your eligibility, we are here to advise you.

Types of capital allowances

There are various types of capital allowances, each with specific rules depending on the asset.

These rules aim to ensure that businesses claim relief fairly based on their investments.

Here are some of the most common allowances:

Annual Investment Allowance (AIA) – Lets you claim 100 per cent of the cost of qualifying assets, like machinery, up to £1 million in the year you buy them. This provides immediate tax relief.
Writing Down Allowance (WDA) – If you exceed the AIA limit, WDA allows you to deduct a percentage of the remaining value each year, spreading the relief over time.
Enhanced Capital Allowances (ECA) – For energy-saving equipment, you can claim 100 per cent of the cost upfront, encouraging eco-friendly investments.
Integral Features Allowance – Applies to building fixtures like heating or ventilation systems, allowing you to claim over a longer period.
Structures and Buildings Allowance (SBA) – You can deduct three per cent of the construction or renovation costs of non-residential buildings annually, encouraging business infrastructure investment.
Full expensing – Claim 100 per cent of the cost of qualifying machinery in the year of purchase, offering full relief upfront to boost business growth.

How to make a claim

To claim capital allowances, identify your qualifying expenses and keep hold of relevant receipts and invoices.

Then, calculate your claim and include it in your annual tax return to keep things straightforward.