Everything You Need To Know About UK’s New 40% First‑Year Allowance Posted on 6 January 20266 January 2026 by Rida Ahmed From 1 January 2026 the UK offers a new 40% first‑year allowance (FYA) for plant and machinery. Announced in the Autumn Budget 2025, the permanent relief lets businesses deduct 40 per cent of qualifying expenditure from taxable profits in the year of purchase. It complements full expensing and the £1 million annual investment allowance (AIA) and is designed to encourage investment where those reliefs are unavailable. This guide explains how the allowance works, who can benefit and how to plan for it. What is the 40% first‑year allowance? Capital allowances let UK businesses offset the cost of capital assets against tax. The new 40% FYA provides accelerated relief on main‑pool plant and machinery that does not qualify for full expensing. Businesses can claim a 40 per cent deduction in the year of purchase and then claim writing‑down allowances (WDAs) on the remaining balance. This front‑loads tax relief compared with the standard WDA, which spreads relief over several years, thereby improving cash flow and encouraging investment. Key features of new first-year allowance Rate and permanence: The FYA is a permanent 40% deduction for new main‑rate plant and machinery. Complementary to existing reliefs: Businesses should still use full expensing and the AIA where available because they provide 100% relief. The 40% FYA applies when full expensing or the AIA is unavailable or exhausted. Follow‑up WDAs: The remaining 60% of the asset’s cost continues to receive relief through annual WDAs, which will fall to 14% from April 2026. Not a super‑deduction: Unlike previous temporary measures, the new FYA is permanent and sits alongside full expensing and the AIA. Who Can Claim the 40% FYA? One of the most significant aspects of this measure is its broad eligibility: Companies and unincorporated businesses – the relief is available to businesses subject to corporation tax and those subject to income tax (sole traders, partnerships and LLPs). Businesses investing in leased assets – the allowance applies to assets bought for leasing. This corrects a long‑standing exclusion that prevented leasing companies from accessing full expensing. It is therefore particularly valuable for hire companies and equipment‑rental businesses. Large and small businesses – there is no cap on qualifying expenditure, so the relief benefits businesses of all sizes. However, companies should still use their £1 million AIA first. Qualifying and Excluded Expenditure Only main‑pool expenditure qualifies. The main pool covers most plants and machinery used in a trade, such as manufacturing equipment, office computers, fixtures and fittings, shop fittings, and trade tools. The following points summarise eligibility: Qualifying items New plant and machinery used in the business (e.g., machinery, equipment, office and shop fittings, furniture, and kitchen and catering equipment). Assets bought for leasing, including hire fleet vehicles and rental equipment. Assets purchased for leasing within the UK – overseas leasing is excluded. Excluded items Cars – even low‑emission cars do not qualify for the 40% FYA. Second‑hand or used assets – the FYA applies only to new expenditure. Special‑rate pool assets – integral features (e.g., lifts, electrical systems) remain in the special pool and are not eligible. Assets leased overseas – leasing to overseas businesses remains outside the scope of the FYA. When Does the New First-Year Allowance Apply? For corporation tax, expenditure incurred on or after 1 January 2026 qualifies for the 40% FYA. For income taxpayers (sole traders and partnerships), the allowance applies from 6 April 2026. Businesses should therefore plan their capital expenditures around these dates to maximise relief. Purchases made before January 2026 will not benefit from the 40% FYA and will instead attract the existing WDAs. Relationship With Full Expensing and AIA Full expensing allows companies to deduct 100% of qualifying new main-rate plants and machinery from taxable profits. It remains available until at least 31 March 2026 and is expected to continue permanently for companies, although the government may review details. Annual investment allowance (AIA) provides 100% relief on up to £1 million of qualifying expenditure for companies and unincorporated businesses each year. The 40% FYA complements these reliefs: Use full expensing first: Companies should always claim full expensing when eligible because it provides 100% immediate relief. Use the AIA next: Businesses should utilise the £1 million AIA before considering the FYA because it also offers 100% relief. Claim the 40% FYA when other reliefs are unavailable: The FYA is particularly valuable for expenditure on assets excluded from full expensing (e.g., assets bought for leasing) or once a business has exhausted its AIA limit. Reduction of Writing‑Down Allowances To finance the new FYA, the government will reduce the main rate of WDAs from 18% to 14% per year. The write-down allowance changes apply from April 1, 2026, for corporation tax and April 6, 2026, for income tax. Businesses should therefore expect slower tax relief on non‑qualifying expenditure and existing main‑pool balances. The reduction makes the 40% FYA more attractive, as it allows a larger upfront deduction before the lower WDA rate applies. Why does 40% FYA matter? Boosts cash flow: Accelerated relief reduces taxable profits in the year of investment, freeing cash for reinvestment. Encourages investment: It addresses calls to extend reliefs to assets not covered by full expensing, particularly leased equipment. Supports unincorporated businesses: Sole traders and partnerships, who cannot claim full expensing, gain access to substantial upfront relief for the first time. Balances the WDA reduction: With annual WDAs falling to 14%, the FYA mitigates the impact by providing greater relief in the first year. Tax Planning Tips Proper planning will help businesses maximise the benefits of the new FYA. Review expenditure timing: Purchases made on or after 1 January 2026 (6 April 2026 for income tax) qualify for the FYA. Consider delaying acquisitions until after these dates to benefit from the relief. Use available allowances in order: Claim full expensing (companies only) and the AIA before using the FYA. This ensures the greatest possible deduction. Assess leasing strategies: If your business buys assets for leasing, the FYA provides upfront relief previously unavailable. The FYA applies only to UK leasing; overseas leasing remains excluded. Model cash‑flow impact: The reduction of WDAs to 14% increases the tax burden on existing main‑pool balances. Modelling can help determine whether accelerating purchases to claim full expensing or delaying them to claim the FYA offers the best outcome. Maintain records: Keep detailed records of qualifying expenditure, especially when assets are leased, to ensure the correct claim and avoid HMRC challenges. Example of How the 40% First-Year Allowance Works in Practice A self-employed mechanic purchases new diagnostic tools and workshop machinery costing £85,000 in February 2027. His Annual Investment Allowance had already been fully used earlier in the year, and full expensing was not available to him. He claims the 40% First-Year Allowance, giving an immediate deduction of £34,000 (£85,000 × 40%) against taxable profits. The remaining £51,000 is added to the main pool and qualifies for writing-down allowances at 14% in the following tax years. If the mechanic pays income tax at 45%, the first-year tax reduction from the FYA alone is £15,300 (£34,000 × 45%). This approach provides faster tax relief and improves short-term cash flow, even where full expensing is unavailable. How Apex Accountants Can Help We specialise in helping our clients navigate complex tax regimes and capital allowances. Our services include: Capital allowances reviews: We identify all qualifying plant and machinery within your business and ensure you maximise claims under full expensing, the AIA, the 40% FYA and other reliefs. Tax planning and modelling: Our experts model the impact of the new 14% WDA and the 40% FYA on your cash flow, helping you decide whether to accelerate or defer purchases. We also advise on the interplay between capital allowances and other reliefs like research and development tax credits. Leasing strategy advice: For businesses that purchase assets as leases, we design optimised financing and leasing structures to maximise tax efficiency while complying with the new rules. Compliance and claim preparation: We prepare capital allowance calculations and submit claims to HMRC, ensuring proper documentation and minimising the risk of queries. Strategic business advice: Beyond capital allowances, we provide broader tax and accounting support, helping you navigate payroll changes, corporation tax planning and investment reliefs. FAQs 1. When does the 40% FYA start? For corporation tax, expenditure incurred from 1 January 2026 qualifies. For unincorporated businesses within income tax, the allowance applies from 6 April 2026. 2. Can I claim the FYA alongside the Annual Investment Allowance? Yes. You should use your AIA first to claim 100% relief on up to £1 million of qualifying expenditure. Once the AIA is exhausted, any additional qualifying expenditure can benefit from the 40% FYA. 3. Can sole traders and partnerships claim the FYA? Yes. Sole traders, partnerships, and limited liability partnerships can claim the 40% FYA, unlike full expensing, which is only available to companies. 4. Does the FYA apply to second‑hand assets or cars? No. The new allowance is restricted to new plant and machinery. Secondhand assets and cars are specifically excluded. 5. Can I claim full expensing and the FYA on the same asset? No. If an asset qualifies for full expensing or the AIA, you cannot also claim the 40% FYA. Choose the relief that provides the greatest deduction. 6. Is the 40% FYA permanent? Yes. The allowance is intended to be a permanent feature of the capital allowances regime. However, future governments could amend rates, so keeping abreast of legislative updates is advisable. 7. What happens to the remaining 60% of expenditure? The remaining cost enters the main pool and attracts writing‑down allowances. From April 2026 the main rate WDA will be 14% (reducing‑balance basis). 8. Does the FYA apply to integral features (e.g., electrical installations)? Integral features fall into the special rate pool and do not qualify for the 40% FYA. These assets attract a 6% WDA. 9. Is leasing equipment overseas eligible? No. The FYA excludes assets leased overseas. Only assets leased to UK customers qualify. 10. Should I accelerate purchases to claim the FYA? It depends. Companies that can claim full expensing may prefer to accelerate purchases before March 2026 to lock in 100% relief. Those investing in leased equipment or unincorporated businesses may benefit from delaying purchases until after 1 January 2026 to access the FYA. Conclusion The 40% first‑year allowance represents a significant change to the UK capital allowances regime. By allowing businesses to deduct 40% of the cost of qualifying main pool plants and machinery in the year of purchase, it delivers a meaningful cash flow benefit. Unincorporated businesses and the leasing industry, previously excluded from full expensing, find the relief particularly valuable. However, the writing-down allowance change from 18% to 14% means that planning is critical. To maximise tax relief, businesses should understand the timing rules, prioritise full expensing and the AIA, and seek professional advice when necessary. With careful planning, the new 40% FYA can support investment, improve cash flow and help your business grow.
How to Claim Capital Allowances on Commercial Property in the UK Posted on 28 November 202531 October 2026 by Muhammad Asif A capital allowance claim on commercial property can reduce the taxable profits of businesses and property investors where qualifying expenditure has been incurred on plant, machinery, fixtures, integral features or certain non-residential structures. For buyers and existing owners, the value is often hidden within the building rather than obvious from the purchase contract. Heating systems, electrical installations, lifts, ventilation, security systems and other fixtures may all need to be reviewed separately. This makes capital allowances for commercial property owners an important part of tax planning when acquiring, refurbishing, fitting out or selling a commercial building. The rules can become particularly important during a property purchase, where historic claims, pooling requirements and a section 198 election may determine how much relief is available to the buyer. What Are Capital Allowances on Commercial Property? Capital allowances allow qualifying capital expenditure to be deducted from taxable profits under the rules set out in the Capital Allowances Act 2001. They are different from accounting depreciation. A business may depreciate an asset in its financial accounts, but the tax deduction is calculated separately under the capital allowances rules. The government’s capital allowances guidance explains the main categories of relief available. For commercial properties, qualifying expenditure can potentially include: plant and machinery integral features fixtures specialist equipment qualifying refurbishment expenditure certain construction costs under Structures and Buildings Allowance A capital allowance claim on commercial property therefore normally requires more than simply applying a percentage to the total building price. The expenditure first needs to be identified and classified correctly. Get Free Consultation Call Anytime 0203 883 4777 Get Free Consultation Capital Allowances for Commercial Property Owners Capital allowances for commercial property owners can arise in several different situations. These include: buying an existing commercial property constructing a new commercial building refurbishing offices, shops, warehouses or hospitality premises carrying out a fit-out installing new mechanical or electrical systems replacing qualifying business equipment acquiring embedded fixtures as part of a property transaction Eligibility depends on who incurred the expenditure, the type of asset and how the property is used. Commercial property businesses can qualify for plant and machinery allowances on eligible expenditure, but the treatment of residential property is more restrictive. What Qualifies as Plant and Machinery? Plant and machinery can include assets used in carrying on the business rather than the basic fabric of the building itself. Examples may include: trade-specific machinery commercial kitchen equipment certain fire alarm systems intruder and security systems CCTV access-control equipment specialist sanitary fittings movable business equipment certain fitted equipment used in the trade The exact treatment depends on the nature and function of the asset. Where expenditure qualifies for the main pool and no first-year relief or AIA is claimed, the current writing-down allowance rate is 14% from April 2026. This replaced the previous 18% main-pool rate. Businesses should therefore avoid relying on older capital-allowance schedules that still assume 18% for current accounting periods. Integral Features in Commercial Property Integral features are treated differently from ordinary main-pool plant and machinery. HMRC identifies integral features, including: electrical systems, including lighting systems space heating systems water heating systems air-conditioning and air-cooling systems hot and cold water systems lifts escalators moving walkways external solar shading These items generally enter the special-rate pool. The current writing-down allowance for the special-rate pool is 6%. Businesses may instead be able to use another available allowance, such as AIA, where the conditions are satisfied. Correct classification matters because putting expenditure into the wrong pool can affect both the timing and amount of tax relief. Annual Investment Allowance The Annual Investment Allowance can provide 100% relief on qualifying plant and machinery expenditure up to the available annual limit. The current AIA limit is £1 million. It can generally be used for qualifying expenditure on plant and machinery, including many special-rate assets. For commercial property projects, this can make AIA particularly useful for expenditure such as: heating equipment air-conditioning electrical systems security equipment commercial kitchens qualifying fixtures The allowance available may need to be adjusted where an accounting period is shorter or longer than 12 months or where connected businesses share an allowance. Full Expensing and the 50% First-Year Allowance Companies may also qualify for full expensing and the 50% first-year allowance. Full expensing provides a 100% first-year deduction for qualifying new and unused main-rate plant and machinery. The 50% first-year allowance applies to qualifying new and unused special-rate plant and machinery. These allowances are available to companies rather than individuals or ordinary partnerships. They can be particularly relevant where a company undertakes a substantial commercial-property fit-out involving new equipment or building systems. However, the business cannot claim multiple allowances on the same expenditure. The most appropriate mix of full expensing, AIA and writing-down allowances depends on the expenditure and the taxpayer’s circumstances. Structures and Buildings Allowance The Structures and Buildings Allowance provides relief for qualifying expenditure on constructing or renovating certain non-residential structures and buildings. The standard SBA rate is 3% per year on a straight-line basis. This generally provides relief over 33⅓ years. SBA can apply to qualifying construction and renovation expenditure, but it does not cover: land expenditure already qualifying for plant and machinery allowances certain planning costs residential structures A valid allowance statement is important. Where an existing qualifying building is sold, the purchaser generally needs the allowance statement from the previous owner in order to continue claiming the remaining SBA. Tax Relief for Commercial Property Purchases Tax relief for commercial property purchases can be particularly valuable because the purchase price may include qualifying fixtures and integral features that are not separately identified in the sale contract. For example, a buyer may acquire: electrical installations heating systems air-conditioning lifts security systems water systems other embedded plant and machinery The tax treatment of those fixtures depends partly on the seller’s capital-allowance history. That is why capital allowances should be considered during the transaction rather than after completion. The Pooling Requirement For certain fixtures transferred with a second-hand commercial property, the seller may need to have brought the relevant expenditure into a capital-allowance pool before the purchaser can obtain allowances. This is commonly known as the pooling requirement. Pooling does not necessarily mean the seller must have claimed every available writing-down allowance. However, the relevant qualifying expenditure generally needs to have been recognised appropriately in the seller’s capital-allowance position. If the rules are not dealt with correctly, the purchaser can lose access to allowances on those fixtures. What Is a Section 198 Election? A section 198 election is a joint election between the seller and purchaser used to fix the amount of the property sale price attributed to qualifying fixtures for capital allowance purposes. The election is made under section 198 of the Capital Allowances Act 2001. The amount agreed can determine: the seller’s disposal value the purchaser’s qualifying expenditure on the fixtures The election must contain sufficient information to identify the parties, the property and the relevant fixtures. It is generally subject to a two-year time limit. This is one reason buyers should not leave the capital-allowance discussion until long after completion. Is a Section 198 Election Always Required? A joint election is the normal way in which the fixed-value requirement is satisfied where the relevant conditions apply. However, it is not correct to say that a section 198 election is the only possible route in every case. Where the buyer and seller cannot agree the value, either party may be able to apply to the First-tier Tribunal to determine it. The application generally needs to be made within the relevant two-year period. The exact approach therefore depends on the property’s history, previous claims and the status of the seller. CPSE Enquiries and Capital Allowances Commercial Property Standard Enquiries can help identify the capital-allowance history of a building before completion. Buyers and their advisers should establish: whether the seller has claimed capital allowances whether qualifying fixture expenditure has been pooled whether previous elections exist what values have previously been fixed whether an election will be agreed on the current transaction whether an SBA allowance statement exists Incomplete responses should be investigated rather than assumed to mean no allowances are available. The capital-allowance position can materially affect tax relief for commercial property purchases, so it should form part of the tax and legal due-diligence process. Can You Claim Capital Allowances on Investment Property? A common search question is: can you claim capital allowances on investment property? For commercial property, the answer can be yes. A UK property business can qualify for plant and machinery allowances on eligible assets used in a commercial property business, subject to the normal capital-allowance rules. For example, a commercial landlord may potentially claim on qualifying: fixtures integral features plant and machinery refurbishment expenditure SBA may also be available for qualifying non-residential construction expenditure. The position is different for residential dwelling-houses, where plant and machinery allowance rules are more restrictive. Commercial Investment Property and Capital Allowances The answer to can you claim capital allowances on investment property therefore depends heavily on what kind of property is involved. A commercial office, shop, warehouse or other non-residential investment property can contain qualifying assets even where the owner does not occupy the property for its own trade. The property business itself may be the qualifying activity. However, entitlement must still be checked against: ownership of the asset who incurred the expenditure prior claims fixture rules the property’s use pooling and fixed-value requirements Refurbishments and Fit-Outs Capital allowances should also be reviewed whenever a commercial property is refurbished or fitted out. Projects may contain several categories of expenditure within one contractor invoice. For example, a refurbishment could contain: structural work electrical installations ventilation heating lighting security systems office equipment specialist trade equipment professional fees A detailed cost breakdown makes it easier to separate expenditure between plant and machinery, integral features and SBA. Businesses undertaking substantial work may also find our business tax planning guide useful when considering the timing of expenditure and available reliefs. Why Detailed Cost Records Matter Capital allowance claims need evidence. Useful records can include: purchase contracts completion statements invoices contractor cost schedules drawings specifications surveyor reports previous capital-allowance computations CPSE replies Section 198 elections SBA allowance statements Where the original purchase documentation does not separate individual fixtures, specialist valuation work may sometimes be required. Claims should be based on supportable evidence rather than arbitrary percentages. Historic and Missed Capital-Allowance Claims Commercial property owners sometimes discover qualifying expenditure years after the original purchase. In some circumstances, qualifying expenditure that has not previously been pooled may still be brought into the capital-allowance computation. However, the position depends on: whether the taxpayer still owns the qualifying asset whether the expenditure has previously been claimed whether the pooling requirement applies whether the fixed-value requirement has been satisfied the property’s ownership history A missed claim should therefore be reviewed individually rather than assuming all historic expenditure can automatically be recovered. Selling a Commercial Property Capital allowances also matter when a commercial property is sold. The seller should understand: which assets have been pooled what allowances have been claimed what disposal values may arise whether a Section 198 election will be required what information needs to be supplied to the buyer SBA also needs separate attention. Where the purchaser is to continue claiming SBA, the relevant allowance statement should pass with the property. Poor handling of the capital-allowance position during a sale can create tax issues for both parties. Get Free Consultation Call Anytime 0203 883 4777 Get Free Consultation Are Capital Allowances Worth It for Commercial Property? The value of a claim depends on the amount and type of qualifying expenditure. A commercial building may contain substantial expenditure on electrical systems, heating, cooling, lifts, water systems and specialist equipment. In some cases, these assets are not separately identified when the building is bought. A review can therefore uncover qualifying expenditure that would otherwise remain within the undifferentiated property purchase price. The actual tax benefit depends on: the qualifying expenditure the allowance available the taxpayer’s tax rate existing pools the timing of the claim the business’s taxable profits The purpose of a review should therefore be to identify supportable qualifying expenditure, not to apply a predetermined percentage to every building. Current Writing-Down Allowance Rates For current claims, businesses need to use the correct rates. From April 2026: Main pool: 14% Special-rate pool: 6% The main-pool rate was previously 18%. If an accounting period crosses the date of the rate change, a hybrid rate may need to be calculated. This is an important freshness update for businesses using older capital-allowance schedules. Furnished Holiday Lettings: 2026 Position The special furnished holiday lettings tax regime ended in April 2025. Former FHL businesses no longer receive the previous special capital-allowance treatment for new expenditure. Transitional rules can still apply to expenditure already brought into a capital-allowance pool before abolition. This means older guidance treating furnished holiday lets as an ongoing separate capital-allowance category should not be relied on for new 2026 expenditure. How Apex Accountants Can Help Apex Accountants can support capital allowances for commercial property owners at different stages of the property lifecycle. Our work can include: reviewing existing and proposed property purchases assessing qualifying plant, machinery and integral features reviewing construction and refurbishment expenditure checking historic capital-allowance positions reviewing pooling requirements supporting Section 198 negotiations examining SBA eligibility preparing capital-allowance computations coordinating with solicitors and surveyors supporting HMRC enquiries where required Businesses can also use our tax planning services to consider capital allowances alongside wider Corporation Tax and investment planning. For construction businesses and technical contractors, our guide to capital allowances for M&E companies explains how similar principles can apply to qualifying mechanical and electrical expenditure. Before Buying a Commercial Property Anyone considering a purchase should address the capital-allowance position before exchange where possible. That means establishing: what the seller has previously claimed whether fixtures have been pooled whether a fixed value is needed whether a Section 198 election will be signed whether SBA statements are available which assets may qualify independently This is often the most effective stage to protect tax relief for commercial property purchases because the relevant points can still be reflected in the sale documentation. Frequently Asked Questions What capital allowances can you claim on commercial property in the UK? Commercial property owners may claim capital allowances on qualifying fixtures, plant and machinery, including heating, electrical systems and lifts. Eligible construction expenditure may also qualify for the Structures and Buildings Allowance at 3% annually. Can you claim capital allowances on property purchases? Yes. Buyers may claim allowances on qualifying fixtures within commercial properties, subject to the seller’s previous claims and applicable pooling and fixed-value requirements. A section 198 election commonly establishes the agreed transfer value. Are capital allowances available on commercial investment property? Yes. Commercial investment properties may qualify for capital allowances on eligible plant, machinery and embedded fixtures. Structures and Buildings Allowance may also continue where qualifying expenditure, allowance statements and other conditions are satisfied.
Capital Allowances on Location Equipment and Vehicles Posted on 16 September 202529 January 2026 by Farazia Gillani Managing location shoots often means investing heavily in specialist equipment and transport. From camera rigs and lighting towers to vans and temporary power units, these costs add up quickly. Capital allowances on location equipment and vehicles help production companies offset investment against taxable profits, delivering real savings and releasing cash flow when needed. At Apex Accountants, we work closely with businesses in the creative and commercial sectors to secure the maximum benefit from capital allowances. With detailed knowledge of industry-specific expenses—such as drone licensing, generator installations, and crew transport—we claim every eligible pound for our clients. This article explains how tax relief on location equipment and vehicles applies in practice. We cover what qualifies, the types of allowances available, numerical examples, case studies, and practical tips to help production companies improve their financial position. What qualifies for relief? Production work often involves high-value equipment and transport. Eligible assets typically include: Cameras, rigs, and sound gear – core filming equipment. Lighting and temporary power – including generators and towers. Drones – with licensing and modifications capitalised alongside purchase costs. Vehicles – vans, minibuses, and lorries for transporting crew and kit. IT hardware – laptops, on-site editing systems, and storage drives. Businesses can only claim assets they own and use for work, while hire charges and private use remain excluded. Examples of allowances in practice Annual Investment Allowance (AIA): If a production company spends £250,000 on new camera rigs, the AIA can give full relief in year one. At a 19% corporation tax rate, that saves £47,500 immediately. Cars and low-emission vehicles: Buying an electric crew car worth £35,000 could qualify for a 100% first-year allowance, cutting tax by £6,650 at 19%. Writing Down Allowances (WDA): A diesel van not qualifying for full AIA relief might be written down at 18% annually. For a £20,000 van, the first-year deduction would be £3,600. Case Study: Location Equipment and Vehicles At Apex Accountants, we recently worked with a UK film production company preparing for a major outdoor shoot. They invested in two location vans (£50,000), portable generators (£20,000), and specialist camera rigs (£60,000). We structured the claims so the entire £130,000 spend qualified under the Annual Investment Allowance. This delivered a £24,700 tax saving in the first year at the 19% corporation tax rate. By securing full relief upfront, the production company released vital cash flow to cover crew wages and on-site logistics. Without proper planning, several years would have been required to write off a significant portion of this expenditure. Our advice ensured they benefited immediately, aligning tax relief on location equipment and vehicles with project deadlines. Practical tips for production companies Plan purchases before year-end to fully use the £1 million AIA limit. Stagger large investments across tax years to maximise available allowances. Prioritise low-emission crew vehicles for higher or immediate relief. Track incidental costs – delivery, installation, and modifications can all be added to the capitalised cost. Keep detailed logs to show assets are used exclusively for business. Use the Writing Down Allowance on vehicles and equipment when assets exceed AIA limits or fall into long-life categories. Industry-Specific Quirks in Capital Allowances on Location Equipment and Vehicles Production companies face unique expenses. For example, temporary site power units, generator installations, and drone licensing costs can all be capitalised. Many businesses miss these, leaving money unclaimed. How Apex Accountants help At Apex Accountants, we provide tailored support to production companies investing in equipment and vehicles. Our team reviews purchase records, supplier invoices, and usage logs to identify every cost that qualifies for capital allowances. We apply the right mix of annual investment allowance, writing down allowance on vehicles and equipment, and first-year allowance to maximise tax savings. We also advise on the timing and structure of purchases, helping businesses align claims with project deadlines and cash flow needs. Whether it’s vans for transport, drones for aerial shots, or temporary power units for remote locations, we ensure nothing is overlooked. By working with us, production companies benefit from immediate relief where possible, reduced corporation tax liabilities, and stronger cash flow for reinvestment in new projects. Contact Apex Accountants today to discuss how capital allowances on location equipment and vehicles can support your production business.
How Capital Allowances For M&E Companies Help Reduce Tax Bills Posted on 3 September 202529 January 2026 by Rida Ahmed Mechanical and Electrical (M&E) companies invest heavily in equipment, tools, and technology to deliver projects on time and to specification. These costs often place significant pressure on cash flow and profitability. At Apex Accountants, we specialise in helping M&E firms manage these financial pressures through capital allowances. Our expertise ensures that companies claim the full relief available and reduce their corporation tax liabilities. This article explains how capital allowances for M&E companies work, the specific types available to M&E firms, practical examples of tax savings, and how proper planning can turn major purchases into valuable tax benefits. What Capital Allowances For M&E Companies Cover Capital allowances apply to capital expenditure on business assets. For M&E firms, common qualifying items include: HVAC systems, pumps, and ducting. Electrical control panels and cabling. Cranes, diggers, and commercial vans. Specialist tools and laser measurement devices. Computers, servers, and cloud-linked IT equipment. Effective use of these allowances provides significant tax relief for M&E companies, improving cash flow while reducing overall liabilities. Main Allowances For M&E Firms Annual Investment Allowance (AIA): Up to £1 million can be claimed at 100% in the year of purchase. This is often used for large equipment or vehicles. First-Year Allowances (FYA): 100% relief applies to approved energy-saving and low-carbon assets. Examples include LED lighting, high-efficiency motors, or water-saving technology. Writing Down Allowances (WDA): Used when costs exceed AIA. Relief is set at 18% for general assets and 6% for long-life or integral features. Structures and Buildings Allowance (SBA): Provides 3% annual relief on the cost of new or refurbished commercial premises used by the firm. These allowances often deliver significant corporation tax savings for engineering firms, particularly those with high investment in machinery and specialist equipment. Tax Saving in Practice A mechanical engineering company buys £350,000 of new fabrication machinery. By using the AIA, the entire cost is deducted in year one. If pre-tax profit was £950,000, the taxable profit drops to £600,000. At a 25% corporation tax rate, this creates an £87,500 saving. If the company also spends £120,000 on approved low-carbon technology, the FYA gives an additional £120,000 deduction, reducing tax by a further £30,000. Combined, the firm keeps £117,500 in cash that would otherwise go to HMRC. Why Records Matter HMRC requires clear evidence of capital expenditure. M&E firms should store invoices, delivery notes, contracts, and asset registers. Good documentation supports accurate claims and secures corporation tax savings for engineering firms during HMRC reviews. Why Choose Apex Accountants for Capital Allowances We analyse expenditure line by line and identify assets often missed, including cabling, integral building features, and mixed-use vehicles. Our team prepares claims in line with HMRC rules to reduce enquiry risk. By planning capital purchases around year-end, we help M&E firms claim relief at the right time for maximum efficiency. Capital allowances reduce corporation tax for M&E companies and improve cash flow. With specialist advice from Apex Accountants, businesses gain immediate tax relief for M&E companies and reinvest savings into growth. Contact Apex Accountants today to discuss your capital allowance claim.
Structures and Buildings Allowance qualifying expenditure Posted on 25 November 202123 July 2025 by Rana Zubair The Structures and Buildings Allowances (SBA) facilitates tax relief for qualifying capital expenditure on new non-residential structures and buildings. The relief applies to the qualifying costs of building and renovating commercial structures. The relief was introduced in October 2018 at an annual capital allowance rate of 2% on a straight-line basis. From 1 April 2020, the annual rate was increased to 3% and the corresponding period reduced to 33 and one third years. HMRC’s internal manuals consider the meaning of qualifying capital expenditure for this tax relief. The manuals state that: The amount of qualifying capital expenditure will depend upon whether the person who first uses the building constructed it themselves, or they acquired it unused from a developer. That amount is determined either directly from expenditure incurred on the construction of a building, or by comparing those costs with the sum paid for the relevant interest in the building. From the total ‘qualifying expenditure’, any amounts that qualify for other capital allowances or are specifically disallowed must be removed. The qualifying expenditure does not change, even when the ownership of the building changes, there are exceptions relating to VAT liabilities and rebates.
130% tax relief for companies – Apex Accountants & Tax Services Posted on 12 August 202121 September 2025 by Rana Zubair Are you thinking of investing in new plant or other equipment? Remember that the super-deduction offering 130% first-year tax relief is available to companies until March 2023. The super-deduction tax break was introduced on 1 April 2021 and allows companies to deduct 130% of the cost of any qualifying investment on most new plant and equipment that would ordinarily qualify for 18% main rate writing down allowances. This means that for every £1 a business invests they can reduce their tax bill by up to 25p. The temporary tax relief applies on qualifying capital asset investments until 31 March 2023. The super-deduction is designed to help companies finance expansion in the wake of the coronavirus pandemic and help to drive growth. In addition, an enhanced first year allowance of 50% on qualifying special rate assets has also been introduced for expenditure within the same period. This includes most new plant and machinery investments that ordinarily qualify for 6% special rate writing down allowances. The measures have effect in relation to qualifying expenditure from 1 April 2021, and exclude expenditure incurred on contracts entered into prior to Budget Day, 3 March 2021. Source: HM Treasury Tue, 10 Aug 2021 00:00:00 +0100
Décor and plant and machinery allowances Posted on 5 August 20219 July 2025 by Rana Zubair Capital Allowances are the deductions which allow businesses to secure tax relief for certain capital expenditure. Capital Allowances are available to sole traders, self-employed persons or partnerships, as well as companies and organisations liable to Corporation Tax. The Capital Allowance legislation does not specifically define plant and machinery (P&M). However, there is legislation that makes it clear that most buildings, parts of buildings and structures are not P&M. An interesting case dating back to 1982 helps to confirm this point of view. The decided case concerns a company that spent money on décor items such as light fittings and wiring as well as decorative items such as wall plaques, tapestries, murals, prints and sculptures. It was accepted that electric wiring was part of the fabric of the building but not the other decorative assets. HMRC’s internal guidance states that inspectors should only accept that items of decor are plant if the taxpayer can show that: the trade involves the creation of atmosphere/ambience and in effect the sale of that ambience to its customers; and the items on which plant or machinery allowances are claimed were specially chosen to create the atmosphere that the taxpayer is trying to sell. For example, a painting on an accountant’s office wall that is owned by the accountant is not plant because selling atmosphere is not part of an accountant’s business. Source: HM Revenue & Customs Tue, 03 Aug 2021 00:00:00 +0100
Tax when you sell an asset Posted on 3 June 20212 July 2025 by Rana Zubair There are special rules that must be followed when you sell an asset on which capital allowances have been claimed. Capital allowances is the term used to describe the tax relief businesses can claim on certain capital expenditure and thereby reduce the amount of taxable profits. The sales value is usually the sales price. If you gave the asset away, stopped using the asset or sold it for less than it was worth then the market value should be used. If you originally claimed 100% tax relief on the item, the business is required to add back the difference to their taxable profits. This is known as a balancing charge. A balancing charge is effectively a way of ensuring that a business does not claim more tax relief than they were entitled to on the purchase of a business asset. The balancing charge works in the opposite way to a capital allowance and increases the amount of profit on which tax is due. If you originally used writing down allowances, you may have a balancing allowance or a balancing charge. There are special rules for dealing with any balancing charges or balancing allowances where a business ceases to trade. Source: HM Revenue & Customs Wed, 02 Jun 2021 00:00:00 +0100
Allowance For Fixed Asset (Annual Investment Allowance) Extended Posted on 19 November 202014 May 2025 by Rana Zubair There is good news for those businesses who are looking to expand their business and invest in the assets of their companies. The government has announced that the temporary Annual Investment Allowance (AIA) cap will be extended for a further 12 months until 1 January 2022. Annual Investment Allowance (AIA) could be claimed on plant and machinery, Integral features, and fixtures Please visit our Tax Services page to know about our tax services. Plant and machinery include: items that you keep to use in your business, including cars costs of demolishing plant and machinery parts of a building considered integral, known as ‘integral features’ some fixtures, for example, fitted kitchens or bathroom suites alterations to a building to install other plant and machinery – this does not include repairs Claim repairs as business expenses if you’re a sole trader or partner – deduct from your profits as a business cost if you’re a limited company. Integral features include: lifts, escalators, and moving walkways space and water heating systems air-conditioning and air cooling systems hot and cold water systems (but not toilet and kitchen facilities) electrical systems, including lighting systems external solar shading Fixtures include: fitted kitchens bathroom suites fire alarm and CCTV systems The government says that this move is intended to boost confidence as companies look to weather the pandemic and plan for the future. This should also encourage investment in qualifying plants and machinery over the next 12 months. The AIA allows for a 100% tax deduction on qualifying expenditure on plant and machinery to be deducted from your profits before tax. The relief is normally capped at £200,000 per annum but was temporarily increased to £1 million for a 2-year period from 1 January 2019 to 31 December 2020. This increased temporary limit is a generous allowance and should cover the annual spending of most small and medium-sized businesses. The AIA is available for most assets purchased by a business, such as machines and tools, vans, lorries, diggers, office equipment, building fixtures, and computers. The AIA does not apply to cars. The extension in the temporary limit means that businesses thinking of incurring large items of capital expenditure will now have additional time to consider their options during these uncertain times. There are complex transitional rules so the timing of any purchase should be carefully considered. If you would like to know more about it, feel free to contact us.
