Claiming Capital\Annual Investment Allowances

Claiming Capital\Annual Investment Allowances

Claiming Capital\Annual Investment Allowances.


What are Capital Allowances?

In running your business there are day to day costs (such as rent, utilities, stationary, salaries, etc.) and there are one-off (usually larger) costs and these will usually be assets. Sometimes these assets maybe known as plant and machinery.

Capital allowances allow you to claim tax relief against the purchase of these assets.

What Can I claim for?

HMRC states you can claim for things such as;

What are Annual Investment Allowances?

Annual Investment Allowances (AIA) are a type of Capital Allowance but there are restrictions for example, you can not claim AIA on cars, items given to you or your business.

  • Items that you keep to use in your business, including vehicles.
  • 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

What are Integral Features?

HMRC lists things such as;

  • 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

When you claim Capital Allowances, it doesn’t matter whether you own or rent the building. However you can only claim for items you bought.

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

You must agree the value of any fixtures with the seller. If you fail to do this, you can not claim for them. Agreeing the value also means the person selling them can account correctly for them

At Nazman Accountants

Call us on (01274) 736000 to discuss how we can help make sense of the complex world of Capital and Annual Investment Allowances and make sure you minimise your Corporation Tax bill.

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