Capital Allowances – TPI Capital

CAPITAL ALLOWANCES

This is a form a tax relief that can be claimed not only by companies, but also partnerships, individuals and overseas investors which carry out qualifying business activities such as a trade, property business, furnished holiday let, etc.

This allows businesses which pay tax in the UK to deduct from their taxable profit (before calculating their tax liability), the value of their qualifying capital expenditure on commercial assets such as equipment or buildings.

Types of capital allowances

Capital allowances is normally only available in respect of non-dwelling commercial properties. There are various forms, types and categories. The most common form of capital allowances is the plant and machinery allowances.

Plant and Machinery Allowances (PMA)

PMA provide tax relief on capital assets such as components of a commercial building and business equipment qualifying as plant and machinery.

Structures and Buildings Allowances (SBA)

SBA is available to tax payers on structural and similar building related works like foundations, flooring, walls, and roofs, in respect of a non-residential business activity.

Research and Development Allowances (RDA)

RDA is available in respect of assets used in the process of carrying out research and development activities such as buildings, equipment and furniture.

Other forms of capital allowances

Other forms of capital allowances such as mineral extraction allowances and dredging allowances exist.

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