Are You Making The Most of Your Capital Allowances

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As a property investors you may juggle various expenses, and tax season can feel overwhelming, especially with a tax bill due. But there’s good news! Capital Allowances offer a helpful tax break specifically for certain qualifying property-related costs.

By claiming Capital Allowances, investors can deduct a portion of the expenditure on assets such as fixtures, machinery, and equipment from their taxable income. This can significantly reduce the amount of tax owed.  Freeing up more capital for further investments or improvements.

Understanding the nuances of Capital Allowances can also aid in making strategic decisions about property acquisitions and renovations.

Moreover, it’s important to stay informed about Capital Allowances. As the Government tends to use them as a tool to encourage investment. Changing the rates up and down, along with adding different types of allowances to the regime, as it sees fit.  All to encourage investment in certain areas.


For companies, where expenditure is less than £1million in the tax year there are two choices in claiming capital allowances – Annual Investment Allowances or Full Expensing. Both options provide a 100% deduction on qualifying expenditure.  This allowing companies to reduce their taxable profits without waiting for gradual tax relief over several years.

The simplicity of the full expensing regime (which is uncapped) may lead companies to think this is the default option going forward. However, businesses need to evaluate which method aligns best with their financial strategies and long-term planning  You must consider factors such as cash flow, future expenditure plans, and overall tax positions, especially on the sale of an asset. 

Moreover, businesses should not overlook the importance of maintaining detailed records and documentation to support their tax filings. This practice not only aids in compliance but also prepares the company for any potential audits or inquiries from tax authorities.  In conclusion, while the full expensing regime offers an attractive option, it is vital for companies to conduct a thorough analysis.  Seeking expert guidance to make informed decisions that align with their unique financial goals and circumstances.

Capital Allowances Knowledge