What are Capital Allowances?

Net Profit
Capital Allowances allow you to save money on your tax bill if your business purchases or invests in a capital asset.

HMRC allows you to claim Capital Allowances if you buy or invest in a capital asset for your business. Capital assets can be tangible or intangible. For example, a domain-name is intangible, and a laptop is tangible.

Capital assets are usually something that will be used by your business for a minimum of two years such as equipment, machinery or vehicles. However you can also claim a Capital Allowance on integral features such as heating systems, and fixtures such as CCTV.

Why would I claim Capital Allowance?

Businesses claim Capital Allowances because – although capital assets often require a larger investment than day to day running costs – these costs are not necessarily ‘allowable for tax’ in the way that other overheads are./p>

By using your Capital Allowance, you can deduct the value (or part of the value) of these allowable assets from your pre-tax profits, which means you will pay less tax to HMRC.

Numberworx customers receive free, unlimited advice on all aspects of their business tax and bookkeeping. We can advise you on what you can and can’t claim Capital Allowances for, as well as other ways you might be able to reduce your tax liability.

We’re here to help!

Unsure whether you can claim a Capital Allowance? Leave your question below, and we will do our best to help.