1. Overview

You can claim capital allowances when you buy assets that you keep to use in your business, eg:

  • equipment
  • machinery
  • business vehicles, eg cars, vans or lorries

These are known as plant and machinery.

You can deduct some or all of the value of the item from your profits before you pay tax.

If you’re a sole trader or partner and have an income of £81,000 or less a year, you may be able to use a simpler system called cash basis instead.

Work out the value of your item

In most cases, the value is what you paid for the item. Use the market value (the amount you’d expect to sell it for) instead if:

  • you owned it before you started using it in your business
  • it was a gift

Other business costs

You claim for the cost of things that aren’t business assets in a different way. This includes:

  • your business’s day-to-day running costs
  • items that it’s your trade to buy and sell
  • interest payments or finance costs for buying assets

Claim these costs as business expenses if you’re a sole trader or partner, or deduct from your profits as a business cost if you’re a limited company.

Other capital allowances

As well as plant and machinery, you can also claim capital allowances for:

If you let out residential property

You can only claim for items in residential property if your business qualifies as a furnished holiday lettings business. In each year the property must be:

  • available for holiday letting for 210 days
  • let for 105 days or more