UK Capital allowances - corporate tax

Capital allowances

Capital allowances can unlock significant cash tax savings and enhance your business cash flow. By reducing your tax liability, claiming capital allowances significantly reduces investment cost. Calculating the value of your claim to maximise the benefits requires specialist knowledge, technical experience and advanced technology. Ensuring accuracy in your capital allowances claim is crucial to avoid unnecessary costs and manage risk.

How we help you with capital allowances

Our team of tax professionals and chartered quantity surveyors are adept at guiding individuals and businesses through the complexities of capital allowances. We can help your organisation do the same.

Introduction to capital allowances

RSM’s specialist team explains the different types of capital allowances and how they can help your business.

Technology

Our Alteryx-based analytical tool, , combines our team鈥檚 extensive expertise with the analytical power of machine learning, enabling precise and comprehensive analysis of extensive fixed asset data sets.

Tailored to meet industry-specific needs, CERT ensures accurate categorisation of fixed asset additions for past and future years, saving you time, cost and reducing your risk.

How capital allowances benefit your business

First year allowances
Structures and buildings
Land remediation relief
Transactions
Historical reviews
Freeports

First year allowances

Super deduction

From 1 April 2021 to 31 March 2023, businesses can claim a 130% allowance for expenditure incurred on new and unused main rate plant and machinery.

Full expensing

From 1 April 2023, a 100% deduction is available for businesses for expenditure incurred on new and unused main rate plant and machinery.

50% special rate first year allowance

From 1 April 2021, this allowance is available for businesses for expenditure incurred on new and unused special rate plant and machinery.

Structures and buildings

Structures and buildings allowances (SBAs) were introduced on 29 October 2018 in respect of new expenditure incurred by businesses on non-residential buildings and structures. SBAs provide tax deductions for expenditure incurred on certain assets that may not previously have qualified for capital allowances. Relief is currently given at 3% per annum on a straight-line basis.

There are strict compliance criteria for making SBA claims – we can provide support to ensure you comply.

Land remediation relief

Land remediation relief can offer substantial tax saving for businesses undertaking the remediation of contaminated land and buildings.

Our specialised guidance ensures businesses effectively claim all eligible expenditure, often resulting in significant cash tax savings. If your business is loss-making, it may be possible to surrender your claim and get cash back from HMRC.

Transactions

Capital allowances can play a pivotal role in determining tax efficiency in property transactions. Our comprehensive support throughout the transaction process includes meticulous due diligence and strategic structuring advice to help you achieve the best capital allowances outcome, relative to wider commercial factors.

We help businesses to maximise tax savings and make well-informed decisions when acquiring or disposing of property assets.

Historical reviews

There is no time limit for making capital allowances claims, provided the asset is still owned in the period when a claim would be made. A large ineligible fixed asset balance may have unclaimed allowances. Reviewing this balance often uncovers untapped tax relief for businesses.

We can review historical balances to unlock missed tax relief, resulting in valuable cash coming back into the business through overpayment of tax.

Freeports

Freeports are designated geographical zones featuring tax incentives such as enhanced capital allowances (ECA) and are designed to incentivise companies to invest at freeport tax sites.

The sunset date for freeports was recently extended to 30 September 2031 in England and 30 September 2034 for green freeports in Scotland.

We can help you understand more about the freeports regime and the potential for enhanced and accelerated capital allowances claims.