You can claim capital allowances when you buy assets that you keep to use in your business, for example:
- business vehicles, for example vans, lorries or cars
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.
This guide is also available in Welsh (Cymraeg).
If you’re a sole trader or partner and have an income of £150,000 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 are not 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:
- renovating business premises in disadvantaged areas of the UK
- extracting minerals
- research and development
- ‘know-how’ (intellectual property about industrial techniques)
- patent rights
- dredging allowances
- structures and buildings
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