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Capital Allowances

TBAT can help you claim Capital Allowances tax relief to offset capital expenditure.

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View our Capital Allowances brochure for more information.

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What is Capital Allowances Tax Relief?

Capital allowances gives taxpayers relief on their tangible capital expenditure by allowing it to be deducted against their annual taxable income. You can deduct some or all of the value of the item from your profits before you pay tax.

UK businesses can claim capital allowances tax relief when they buy assets that are kept to use in the business, for example if your business owns assets such as:

  • Equipment
  • Machinery
  • Business vehicles (cars, vans, lorries)
  • Computers
  • Integral building features
  • Renovating business premesis in disadvantaged areas of the UK
  • Research & Development
  • ‘Know-how’ (Intellectual property and industrial techniques)
  • Patents
  • Extracting Minerals
  • Dredging
  • Structures & Buildings

How can TBAT help?

With our vast experience in helping business claim tax relief, our expert consultants can assist you to make a robust claim by helping you identify all of your eligible expenditure and calculate the value of your claim. Contact us here.

Research & Development Capital Allowances

There are a number of schemes offered by the Government, one of these is Research and Development (R&D) Capital Allowances. Research & Development Capital Allowances give relief for capital expenditure on qualifying research and development. Applying for these allows you to release cash into the business in the year of expenditure and can also be claimed up to two years in arrears. R&D Allowances provide 100% uncapped first year writing down allowances on R&D assets such as facilities, plant & machinery and IT systems.

Capital Allowances are especially valuable if you have capital spend on the buildings and facilities utilised for R&D work, as these might not be eligible for 100% relief utilising other types of capital allowance such as Annual Investment Allowance (AIA). Expenditure that can be covered by R&D Capital allowances includes the purchase, building, extension and refurbishment of these R&D facilities. This could also include build-costs which do not usually benefit from other forms of tax deduction.

Claim Calculation Examples

Company X buys new manufacturing equipment and extends its factory to accommodate the new equipment. It spends £200k in total – £100k on the equipment and £100k on the building.

Scenario 1, Annual Investment Allowance Scheme (AIA)– The equipment totalling £100k is allocated to the Annual Investment Allowance (AIA) scheme and deducted in full. The balance of £100k relating to the building work is not deducted for tax purposes. At 19% corporation tax rate, the company, therefore, makes a £19k tax saving under the AIA scheme.

Scenario 2, Research & Development Allowance Scheme (RDA) – Although this is manufacturing facility, qualifying R&D is undertaken in the facility, so therefore a proportion of the building capital expenditure should be eligible for RDAs at 100%. Assuming a proportion of 50% of the building cost, this equates to £50k, at 19% corporation tax, gives a tax saving of £9.5k. The total tax saving now is £28.5k (£19k from equipment spend under the AIA scheme and £9.5k from the building spend under the RDA scheme).

How can TBAT help with Research & Development Capital Allowances Tax Relief?

With our vast experience in helping business claim tax relief, our expert consultants can assist you to make a robust claim by helping you identify all of your eligible expenditure and calculate the value of your claim. Contact us here.

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Assists organisations in accessing research and development grant funding across a range of UK and EU schemes and industry sectors.

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