(December 5, 2014)

On December 5, 2014 a set of documents/webpages, together called "Capital Allowances Manual" was published on the GOV.UK website as part of the Business tax - collection.

Capital Allowances let taxpayers write-off the cost of certain capital assets against taxable income. They take the place of depreciation charged in the commercial accounts, which is not normally deductible for tax purposes.

According to the Manual not every type of capital expenditure qualifies for capital allowances. For example, expenditure on the following does not qualify:

• commercial buildings (apart from expenditure on buildings qualifying for Enterprise Zone Allowances, Research & Development Allowances or Business Premises Renovation Allowances)
• residential buildings
• land
• some intangibles, such as trade marks and goodwill.

The manual continues by stating that capital allowances currently available are given for capital expenditure on: 

• the provision of machinery or plant;
• the conversion or renovation of unused space above shops and other commercial premises into flats;
• the conversion or renovation of unused business premises in Assisted Areas;
• mineral extraction;
• research and development (formerly scientific research);
• know-how;
• patents;
• dredging;
• constructing buildings for letting under the assured tenancies scheme (but only for expenditure incurred in 1982 - 1992).

Furthermore the Manual states that capital allowances for the following were abolished with effect from April 1, 2011 for corporation tax purposes and April 6, 2011 for Income tax purposes 

• industrial buildings, qualifying hotels and commercial buildings in enterprise zones
• agricultural buildings and works

To be forwarded to the webpage of the UK Government where you can find the Capital Allowances Memo as issued by the UK Government, click here. The website of the UK Government will open in a new window.

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