Tax allowances for business investment

Making the most of your investment

Capital expenditure, be it on property, equipment or vehicles, will represent a major investment which you make to set up, maintain or expand your business. It is therefore important that you benefit from any available tax relief. You cannot deduct capital expenditure or depreciation when calculating your taxable profits. Instead, many types of capital expenditure qualify for capital allowances. But make sure you plan ahead because the rules are often updated.

For example, a new relief introduced in 2019/20 provides for an annual 2% write-off for the construction costs of commercial property. The annual investment allowance has also been increased temporarily from £200,000 to £1,000,000.

If you use certain assets in a trade, you can claim capital allowances if you are in business as an individual, a partnership, a company or as a trustee of a trust. Allowances may also be available if you let property or are involved in agriculture. The most important allowances are those for plant and machinery.