Capital allowances (UK tax)
Capital allowances provide tax relief for qualifying capital expenditure, such as eligible plant and machinery, rather than automatically using accounting depreciation as the tax deduction. The available allowance, pool, timing, claim and disposal treatment depend on the asset, taxpayer, accounting basis and applicable law. Annual investment allowance, writing-down allowances and first-year allowances have distinct conditions. Apply the tax year and syllabus exclusions stated in the question.
Worked example
A trader buys qualifying equipment for business use and checks whether a relevant allowance can be claimed before calculating adjusted taxable profit. The accounting depreciation charge is considered separately.
Common mistake
Treating every capital purchase as immediately deductible or substituting accounting depreciation for the statutory allowance without checking the rules.
Where it appears in your exams
| Qualification | Exam | Relationship | Period |
|---|---|---|---|
| ACCA | TX (UK) | Direct | June 2026–June 2027 |