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Capital allowances provide tax relief for assets that have an expected life of more than one year within your business.
Businesses can typically claim capital allowances on assets known as plant and machinery because these are used in your business on a day to day basis including:
- Vehicles including vans, lorries and cars
A claim for capital allowances is made on the business’s tax return and they are claimed instead of depreciation (which is not a tax deductible expense). Maximising your capital allowances claim is an effective way of reducing your taxable profits and ultimately your tax liability.
If you are about to undertake expenditure on plant or equipment be sure to speak to one of our tax experts to see how this can be best structured for your circumstances.