What are capital allowances? A plain-English guide

Published 26 October 2026. Information last checked 26 October 2026.

Capital allowances are a way to get tax relief on certain spending on assets that your business keeps and uses, such as machinery and equipment. Instead of deducting the cost like an everyday expense, you claim an allowance against your profits.

Common types of allowance

• Annual investment allowance (AIA). GOV.UK says businesses can claim up to £1 million on certain plant and machinery.
• Full expensing and 50% first-year allowance. These are available to companies on qualifying plant and machinery.
• Writing down allowances. Spread relief over several years where other allowances do not apply.

Points to watch

Cars are treated differently from other equipment. Companies and unincorporated businesses can have different options. Rules, limits and rates can change.

When a specialist helps

If you have invested in equipment or premises, a specialist can identify what may qualify and check past spending. Always ask how they charge first.

Check GOV.UK for the latest rules. This article is general information, not tax advice. Last checked 26 October 2026.

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