Expenditure on items such as plant and machinery, cars and vans, industrial buildings etc is not classed as an allowable expense for the reduction of trading profits. However a business is allowed to claim capital allowances.

Capital Allowances allow the cost of capital assets to be written off against the taxable profits of a business. They are given in lieu of depreciation charged in the commercial accounts, which is not allowed for tax purposes.

The rate at which allowances can be claimed depends upon the asset. Certain assets are eligible for capital allowances up to 100% of the purchase cost.

Expenditure on goodwill and other intangible assets is allowed for tax in the same amount as the accounting write down.

The main capital allowances available are: