28 October 2025 · 6 min read · Bruce Thomas
Depreciation is not deductible for tax. Capital allowances are the statutory replacement, giving relief for qualifying capital expenditure at rates set by legislation rather than by your accounting policy.
What typically qualifies
- Plant and machinery, including production equipment and tooling
- Commercial vehicles and vans
- Computers, servers and IT equipment
- Fixtures and integral features within commercial buildings
- Workshop and office fit-out, subject to the specific items
Integral features are widely missed
When a commercial property is bought or refurbished, items such as electrical systems, heating, air conditioning and lifts can qualify. Where nobody has undertaken a proper apportionment, the relief simply never gets claimed.
Timing changes the value
Expenditure incurred a week before the year end is relieved a full year earlier than expenditure a week after it. Where a purchase is planned anyway and the cash is available, the date genuinely matters.
Cars are different
Cars have their own rules based on emissions, with restricted rates for most vehicles. Vans and genuine commercial vehicles are treated far more favourably, which is one reason the classification of a vehicle should be checked before purchase.
Balancing charges on disposal
Selling an asset for more than its written down value can produce a balancing charge — taxable income in the year of sale. It is not a reason to avoid claiming, but it should be anticipated rather than discovered.
This article is general guidance for business owners in the UK and does not amount to advice for your particular circumstances. Tax rules change and the right answer depends on your figures — please take specific advice before acting.
