Claim capital allowances

4. First year allowances

If you buy an asset that qualifies for first year allowances you can deduct the full cost from your profits before tax.

You can claim first year allowances in addition to annual investment allowance - they don’t count towards your AIA limit.

What qualifies

You can claim ‘enhanced capital allowances’ (a type of first year allowances) for the following energy and water efficient equipment:

  • some cars with low CO2 emissions
  • energy saving equipment that’s on the energy technology product list, eg certain motors
  • water saving equipment that’s on the water efficient technologies product list, eg meters, efficient toilets and taps
  • plant and machinery for gas refuelling stations, eg storage tanks, pumps
  • gas, biogas and hydrogen refuelling equipment
  • new zero-emission goods vehicles

You can’t normally claim on items your business buys to lease to other people or for use within a home you let out.

How to claim

Claim on your tax return.

If you don’t claim all the first year allowances you’re entitled to, you can claim part of the cost in the next accounting period using writing down allowances.