Capital Allowances 2025-26

A practical, comprehensive guide to the UK system of capital allowances.

Use this book to avoid costly errors, and to maximise tax relief, thereby protecting the interests of all businesses and commercial property owners. Detailed and practical guidance on key topics re plant and machinery allowances: cars, fixtures in property, annual investment allowances, special rate expenditure, short-life assets, etc. Other allowances, including those for capital expenditure on R&D, and also structures and buildings allowance, are also covered in depth.

New for this edition:

• Court of Appeal decision in Altrad anti-avoidance case
• Supreme Court ruling in Centrica re nature of capital expenditure
• The rules relating to the cash basis have been extensively re-written and updated
• Changing rules re losses on property businesses as a result of abolition of FHLs regime
• Updated HMRC guidance re REITs
• Updated qualifying activities (re FHLs abolition)
• Updated commentary re serviced accommodation (re FHLs abolition)
• Extensive new commentary on Mersey Docks and Gunfleet/ Orsted cases re expenditure being “on the
• provision of” plant or machinery
• Mersey Docks case re meaning of plant or machinery
• Mersey Docks case re piecemeal approach
• HMRC confirmation re thermal insulation as plant
• HMRC confirmation re personal security costs as plant
• Repeal of the rules relating to assets rotated between property businesses
• Updated HMRC guidance re meaning of dwelling-house
• Updated HMRC guidance re replacement of domestic items
• Ending of FHLs regime
• HMRC clarification about apportioning expenditure for purposes of claiming AIAs
• HMRC clarification re cars being “unused and not second hand” even when pre-registered by a dealer
• Extension to 2026 of first-year allowances for zero-emission cars
• First-year allowances for zero-emission goods vehicles not extended beyond April 2025
• First-year allowances for electric vehicle charging points extended to 2026
• Expanded HMRC wording re disposal values when assets transferred to employees
• HMRC confirmation re software as plant
• Confirmation of amended capital allowances treatment of double cap pick-ups
• Commentary expanded re nature of “relevant transactions” re anti-avoidance rules
• Additional HMRC example re conditions for claiming SBAs
• HMRC clarification re SBAs allowance statement requirement where vendor unable to claim
• HMRC letter to CIOT re commencement date of construction for SBA purposes
• Additional HMRC commentary re first use of structures (e.g. access roads) for SBA purposes
• HMRC clarification to the CIOT re commencement date for SBA purposes in relation to site clearance activities
• Clarification that SBAs not available for abortive expenditure
• Extensive additional commentary, with case law analysis, on meaning of “renovation or conversion”
• SBAs for costs of highways, etc., where these do not fall within the rules for highway undertakings
• HMRC clarification re additional allowance statement requirement for freeports and investment zones
• Updated commentary relating to the different guidelines for the meaning of research and development
• Updated lists of freeports and investment zones