How to correctly claim for capital allowances

How to correctly claim for capital allowances

We are back with another post that will surprise you.

Are you claiming for capital allowances correctly?

You can claim capital allowances on items that you keep to use in your business – these are known as ‘plant and machinery’.

In most cases you can deduct the full cost of these items from your profits before tax using annual investment allowance (AIA).

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.

What does not count as plant and machinery

You cannot claim plant and machinery allowance on:

  • things you lease – you must own them
  • items used only for business entertainment, for example a yacht or karaoke machine
  • land
  • structures, for example bridges, roads, docks
  • buildings, including doors, gates, shutters, mains water and gas systems

You may be able to claim structures and buildings allowance on structures and buildings.

What counts as plant and machinery

Plant and machinery includes:

  • items that you keep to use in your business, including cars
  • costs of demolishing plant and machinery
  • parts of a building considered integral, known as ‘integral features’
  • some fixtures, for example fitted kitchens or bathroom suites
  • alterations to a building to install other plant and machinery – this does not include repairs

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

Integral features

Integral features are:

  • lifts, escalators and moving walkways
  • space and water heating systems
  • air-conditioning and air cooling systems
  • hot and cold water systems (but not toilet and kitchen facilities)
  • electrical systems, including lighting systems
  • external solar shading


You can claim for fixtures, for example:

  • fitted kitchens
  • bathroom suites
  • fire alarm and CCTV systems

You can claim if you rent or own the building, but only the person who bought the item can claim.

When you buy a building from a previous business owner you can only claim for integral features and fixtures that they claimed for.

You must agree the value of fixtures with the seller. If you do not you cannot claim for them. Agreeing the value also means the person selling the assets can account correctly for them.

If you let residential property

You can only claim for items in residential property if either:

  • you run a furnished holiday lettings business
  • the item is in the common parts of a residential building, for example a table in the hallway of a block of flats

Does any of this resonate with you or your business? Book in a call with Lucy below, at a time that suits you.

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