Last updated: 14 October 2026
Which assets qualify for capital allowances?
Most equipment, machinery and vehicles a business buys to use over time qualify, as do many fixtures in commercial buildings. These are “plant and machinery”. Buildings themselves don’t qualify for plant and machinery allowances, though new commercial buildings can get the structures and buildings allowance (SBA) at 3% a year. Some assets that seem like part of a building, such as heating, lighting and air conditioning, can qualify as “integral features”.
What usually qualifies
| Asset | Qualifies? | Allowance |
| Computers, tools, machinery | Yes | AIA, full expensing or 18% pool |
| Office furniture | Yes | AIA, full expensing or 18% pool |
| Vans and lorries | Yes | AIA, full expensing or 18% pool |
| Cars | Yes, but not AIA | 100% if new zero-emission, otherwise 18% or 6% |
| Electrical, heating, lifts, air con (integral features) | Yes | AIA or 50% first-year allowance, otherwise 6% pool |
| Thermal insulation of commercial buildings | Yes | Special rate |
| New commercial buildings and extensions | SBA only | 3% a year |
| Land | No | None |
| Residential property let out | Generally no | Only for common parts of blocks |
Why some assets “seem” to qualify
Many items look like part of a building but qualify as plant. Examples include:
- Kitchen and bathroom fittings in commercial premises
- Security systems and CCTV
- Fire alarms and sprinklers
- Shop fittings and display units
Tribunals use a “function test”: if the asset performs a function in the business, rather than being part of the setting, it’s likely to be plant.
Fixtures in a property you buy
When you buy a commercial property, you can claim allowances on fixtures only if the seller has “pooled” their expenditure and you agree its value, usually by a section 198 election within 2 years of the purchase. Without this, you may lose the allowances entirely.
Example
Milner Dental Ltd fits out a new surgery for £180,000. Of this, £60,000 is dental chairs and equipment, £45,000 is electrical, heating and air conditioning, and £75,000 is building work. The company claims the AIA on the £105,000 of equipment and integral features, and SBA at 3% on the £75,000 building work: £2,250 a year.
Getting the claim right
- Keep detailed invoices that split costs by asset type
- Ask your builder or surveyor to break down fit-out costs
- Consider a specialist capital allowances survey for large projects
2026/27 allowances summary
- Annual Investment Allowance: £1 million
- Full expensing (companies, new main-pool plant): 100%
- 50% first-year allowance for special-rate assets (companies)
- New 40% first-year allowance from January 2026, including for leased assets
Common mistakes
- Treating the whole fit-out cost as building work and losing allowances on plant
- Claiming capital allowances on repairs that should be revenue expenses
- Missing the 2-year deadline for a fixtures election on a property purchase
- Claiming full expensing on second-hand items, which only qualify for the AIA or pool allowances
Frequently asked questions
Can I claim on second-hand equipment?
Yes, through AIA, but not full expensing.
Does software qualify?
Bought software usually does.
Are repairs capital allowances?
No, repairs are deducted as revenue expenses.
Can a residential landlord claim on furniture?
No, but replacement domestic items relief applies.
Related: fixtures and maximum capital allowances, the Annual Investment Allowance for sole traders and capital allowances after the super-deduction.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with identifying assets that qualify for capital allowances. See our small business accountants service, or contact us for a free, no-obligation quote.
This page is general guidance based on HMRC rules for the 2026/27 tax year, checked against gov.uk on 14 October 2026. It is not personal advice, so speak to an accountant about your own situation.
