Capital Allowances: Accelerating Tax Relief on Business Assets
Capital allowances provide valuable tax relief on capital expenditure for business assets. Rather than writing off the cost over many years, capital allowances allow you to claim significant tax deductions in the year of purchase or through accelerated rates. This reduces your corporation tax liability and improves cash flow, making capital allowances one of the most valuable tax reliefs available to UK businesses.
At SCG Tax Limited, we specialize in identifying and claiming all available capital allowances for your business. Our Chartered Tax Advisors possess deep technical knowledge of capital allowances legislation and practical experience working with businesses across diverse sectors. We serve companies across all of London and every region in the UK.
Many businesses fail to claim their full entitlement to capital allowances, leaving substantial tax relief unclaimed. Our comprehensive approach ensures you benefit from Annual Investment Allowance, structures and buildings allowances, embedded capital allowances in commercial property, and all other qualifying reliefs.
Types of Capital Allowances
Annual Investment Allowance
100% tax relief on qualifying plant and machinery expenditure up to £1 million per year. Immediate full deduction against taxable profits.
Embedded Capital Allowances
Substantial tax relief on qualifying fixtures within commercial properties including electrical, heating, plumbing, and integral features.
Structures and Buildings Allowance
3% annual tax relief on qualifying non-residential structures and buildings constructed or renovated since October 2018.
First Year Allowances
Enhanced 100% relief on qualifying energy-efficient and environmentally beneficial equipment and vehicles.
Writing Down Allowances
Annual tax relief at 18% for main pool assets and 6% for special rate pool assets on reducing balance basis.
Full Expensing
100% first-year relief on qualifying main rate plant and machinery for companies only, available from April 2023.
What Assets Qualify for Capital Allowances?
Plant and Machinery
- Office equipment and computers
- Manufacturing machinery and tools
- Commercial vehicles and vans
- Furniture and fixtures
Integral Features
- Electrical systems and lighting
- Heating and cooling systems
- Water and sanitation systems
- Lifts and escalators
Commercial Property Fixtures
- Fire detection and alarm systems
- Security systems
- Fitted kitchens and bathrooms
- Moveable partitions
Specialized Assets
- Energy-efficient equipment
- Research and development equipment
- Electric vehicle charging points
- Software and digital assets
Embedded Capital Allowances: Unlocking Hidden Tax Relief
Embedded capital allowances represent one of the most overlooked tax relief opportunities for businesses owning or purchasing commercial property. Through detailed cost segregation analysis, we identify qualifying fixtures and fittings within your property that are eligible for accelerated tax relief.
Many property owners assume that buildings do not qualify for tax relief, but this is incorrect. Significant portions of commercial property expenditure qualify as plant and machinery or integral features, eligible for capital allowances at rates far exceeding the 3% structures and buildings allowance.
Example: Office Building Purchase
A company purchases an office building for £2 million. Through embedded capital allowances identification, we identify £600,000 of qualifying fixtures including:
- Electrical systems: £150,000
- Heating and cooling: £180,000
- Plumbing and sanitation: £100,000
- Fire and security systems: £80,000
- Lifts: £90,000
Result: The company can claim 18% annual writing down allowances on £600,000, generating £108,000 of tax deductions in year one compared to £60,000 (3% of £2 million) without embedded capital allowances identification. This represents a corporation tax saving of approximately £9,120 in year one alone (at 19% corporation tax rate).
Our Capital Allowances Service Process
Asset Review and Identification
We conduct a comprehensive review of your capital expenditure, examining invoices, property details, and business assets to identify all items qualifying for capital allowances relief.
Classification and Valuation
Assets are classified into appropriate capital allowances pools (main rate, special rate, AIA) with valuations substantiated by invoices, professional estimates, or cost segregation analysis for property.
Claim Optimization
We optimize your claim by utilizing Annual Investment Allowance strategically, identifying first year allowances, and ensuring maximum tax relief is claimed in the most tax-efficient manner.
Documentation and Compliance
Full documentation is prepared supporting your capital allowances claims, ensuring HMRC compliance and providing protection in the event of future enquiries.
Client Benefits of Capital Allowances Services
Immediate Tax Relief
Claim substantial tax deductions in the year of purchase through Annual Investment Allowance and first year allowances, improving cash flow.
Unlock Hidden Reliefs
Identify embedded capital allowances in property that many businesses miss, generating substantial additional tax savings.
Reduce Corporation Tax
Lower your corporation tax liability through legitimate tax relief on capital investments in your business.
Expert Compliance
Ensure claims are correctly prepared and fully documented, providing protection against HMRC enquiries.