Thinking of investing in a new laptop? Of buying a business vehicle? Or of getting some other piece of equipment you need for your business or to help it operate more efficiently? These purchases are usually tax-deductible. But HMRC doesn’t treat them the same way they treat day-to-day expenses such as business mileage and office utilities. You can’t just subtract the cost from your income. To get your tax deduction, you’ll have to claim capital allowances. Here’s a rundown of what capital allowances are and how they work in the UK.
What are capital allowances?
Capital allowances are a way of reducing your tax bill when you spend money on something that’ll benefit your business in the long term. This is called capital expenditure. You make capital expenditure when you: Buy an asset you’ll use in your business. This is called a capital asset Spend money on upgrades Spend money on maintaining a capital asset.
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