Capital allowances ― general requirements

Produced by a Tolley Owner-Managed Businesses expert

Owner-Managed Businesses

Guidance

In the broadest sense, capital allowances are a form of tax-approved depreciation. Depreciation, as calculated under GAAP, is not an allowable deduction in computing the profits of a trade chargeable to income tax or corporation tax because it is an item of a capital nature. See the Capital vs revenue expenditure guidance note.

Instead, relief is given by treating the capital allowances as an expense to be deducted when arriving at the taxable trading profits. Likewise, any charges are treated as taxable receipts.

The relevant legislation is set out in the Capital Allowances Act 2001.

Types of capital allowances

Capital allowances are only available for a limited range of assets, each with a separate set of rules, the main ones are:

•
plant and machinery including cars, see the What is plant and machinery? and Capital allowances on cars guidance notes
•
integral features and long-life assets, see the Special rate pool and long life assets guidance note
•
research and development facilities, see the Research and development tax relief ― capital expenditure guidance note
•
structures

Access this article and thousands of others like it
free for 7 days with a trial of Tolley+™ Guidance.

TAKE A FREE TRIAL

Popular Articles

Value Added Tax

Exemption ― burial and cremation

Exemption ― burial and cremationThis guidance note provides an overview of the VAT treatment of services that are provided in connection with the burial or cremation of human remains.VAT treatmentThe following services are exempt from VAT:•the disposal of the remains of the dead•making arrangements

14 Jul 2020 11:38 | Produced by Tolley Read more

Trusts and Inheritance Tax

Payments to trust beneficiaries

Payments to trust beneficiariesThis guidance note considers the trustees powers to make payments and whether the payment made is income or capital.This guidance note is designed to give outline and background for accountants and tax advisers who deal with clients establishing trusts. It is not

14 Jul 2020 12:52 | Produced by Tolley Read more

Corporation Tax

Overseas property businesses for companies

Overseas property businesses for companiesOverviewReal estate income is generally taxed where the property is located; the UK tax treaties generally allow the jurisdiction where the land is located to tax income from the land.Therefore, a UK company with overseas property may be subject to tax in

14 Jul 2020 12:22 | Produced by Tolley in association with Rob Durrant-Walker of Crane Dale Tax Read more

UU��ֱ��