Capital Allowances  

Definition of Capital Allowances This is the amount firms can deduct from their taxable profits to be used for investment expenditure. The motive for capital allowances is that they encourage more investment as firms can avoid paying tax.

In the UK, capital allowances were set in:

Capital Allowances Act 1990

Capital Allowances Act 2001 link

Capital Allowances Rates in UK

In the UK, capital allowances are 40% FYAs for small business and medium term business

100% Capital Allowances are available for

  • Small firms in ICT
  • Investment in water saving equipment
  • Investment in energy saving equipment
  • Investment for low CO2 emissions

Capital allowances at HMRC


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