Capital Allowances

How capital allowances works

The available relief depends on the taxpayer, asset, expenditure, timing and financing structure. Annual Investment Allowance, first-year allowances and writing-down allowances have different conditions and exclusions.

Practical UK business example

A company purchasing qualifying equipment asks its accountant which allowance is available and when the claim can be made, including any hire purchase implications.

Illustrative example only; not a finance quotation or a client case study.

Why it matters

The tax profile can change an investment’s after-tax cost and cash planning, but should be modelled separately from its finance payments.

Limitations and common misconceptions

Accounting depreciation is not automatically a tax deduction. Not every asset, lease or borrower qualifies for the same relief, and a deduction is not a grant equal to the asset price.

Explore asset finance to discuss how the structure relates to your business.