Last updated: 14 October 2026
How do you make sure all fixtures qualify for maximum capital allowances?
When you buy a commercial property, part of the price often relates to fixtures that qualify as plant and machinery, such as heating, lighting, electrical systems, lifts and air conditioning. To claim allowances on them, you must meet HMRC’s pooling and fixed value requirements. In practice, that means the seller must have pooled their own spending on the fixtures, and you must agree a value with the seller, usually with a section 198 election, within 2 years of completion. Miss these steps and the allowances can be lost permanently.
What counts as a qualifying fixture
| Type | Pool | Rate |
| Electrical systems, including lighting | Special rate (integral features) | 6%, or AIA |
| Cold water, heating and air conditioning | Special rate (integral features) | 6%, or AIA |
| Lifts and escalators | Special rate (integral features) | 6%, or AIA |
| Sanitaryware, kitchen fittings, fire alarms, CCTV | Main pool | 14%, or AIA/full expensing for new assets |
| The building structure itself | Not plant; possibly structures and buildings allowance | 3% a year |
The three rules on a purchase
- Pooling requirement: the seller must have added their spending on the fixtures to a capital allowances pool before the sale, if they were entitled to claim.
2. Fixed value requirement: the buyer and seller must fix the value of the fixtures, either by a section 198 election (within 2 years) or a tribunal decision.
3. Disposal value statement: where the seller wasn’t required to pool, for example a pension fund or charity, they give a written statement instead.
Example
A dental practice buys a freehold surgery for £600,000. A specialist survey identifies £120,000 of qualifying fixtures, including £80,000 of integral features. The seller, a previous trading company, pooled its own costs and agrees a section 198 election at £120,000. The practice claims the AIA on the full £120,000, which saves about £30,000 for a company paying 25% corporation tax.
Getting the value right
The value in the s198 election can’t exceed the seller’s original cost. A low value, such as £1, suits the seller by avoiding a balancing charge, but leaves the buyer with almost nothing. Negotiate this before exchange, as part of the purchase contract.
New builds and refurbishments
If you construct or fit out a building, analyse the costs so qualifying fixtures are separated from the structure. Contractors’ invoices should break down mechanical and electrical work.
Records to keep
- The signed section 198 election and HMRC copy
- A fixtures survey with valuations
- The seller’s pooling evidence
- Invoices for fit-out work
Leasehold premises
Tenants who pay for their own fit-out, such as new lighting or air conditioning, can usually claim on that spending even though the landlord owns the building. A landlord’s contribution towards a tenant’s fit-out may affect who can claim, so set this out in the lease.
Frequently asked questions
Can I claim if the seller never claimed?
Only if they pool the costs before the sale; agree this in the contract.
Is the 2-year deadline strict?
Yes, for the election.
Does this apply to residential lets?
No, fixtures in dwellings don’t qualify, except in furnished holiday lets before April 2025.
Can a surveyor help?
Yes, specialist surveyors identify fixtures.
Related: AIA for sole traders, capital allowances for 2006 accounts and capital allowances on boats.
Talk to Accotax
Want this handled for you? Our team at Accotax can help with capital allowances on property fixtures. 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.
