Claiming Capital Allowances on Business Assets: A 2025 Guide
Capital allowances are a key way for UK businesses to reduce their tax bills. If your business buys equipment, machinery, or other qualifying assets, you can claim a portion of their cost against your taxable profits.
In this guide, we explain how claiming capital allowances on business assets works in 2025, the types of assets that qualify, and how to maximise your tax relief.
1. What Are Capital Allowances?
Capital allowances let businesses deduct the cost of qualifying capital expenditure from their taxable profits. Instead of writing off the entire cost in one go, these allowances spread the relief over several years (although some types allow full relief upfront).
2. What Assets Qualify?
You can claim capital allowances on:
- Machinery and equipment
- Office furniture
- Computers and IT systems
- Commercial vehicles (e.g. vans, lorries)
- Fixtures and fittings in commercial properties
Cars have separate rules depending on their emissions.
3. Types of Capital Allowances in 2025
a) Annual Investment Allowance (AIA)
- Provides 100% tax relief on qualifying expenditure up to £1 million per year
- Most plant and machinery (excluding cars) qualify
b) Writing Down Allowances (WDA)
- Used when AIA isn’t available or has been exceeded
- Standard rate is 18% or 6% (for special rate assets) per year on a reducing balance basis
c) First-Year Allowances (FYA)
- Allow 100% relief in the first year for specific energy-efficient or environmentally friendly equipment
- Includes some low-emission cars and green technology
d) Super-Deduction (Now Ended)
- This COVID-era temporary incentive ended in March 2023 and is no longer available in 2025
4. Capital Allowances on Cars
The tax relief for cars depends on CO₂ emissions:
- 0 g/km (electric): Eligible for 100% first-year allowance
- 1–50 g/km: 18% WDA
- Over 50 g/km: 6% WDA
5. How to Claim Capital Allowances
- Include them in your Self Assessment tax return or Company Tax Return
- Keep detailed records and receipts of all purchases
- Ensure assets are used wholly or partly for business purposes
6. Common Mistakes to Avoid
- Claiming for assets used mainly for personal use
- Missing the deadline for including claims in your tax return
- Overlooking small assets that qualify for AIA
How Eclat Accountancy Can Help
At Eclat Accountancy, we:
- Help identify which assets qualify
- Maximise your capital allowance claims
- Ensure proper documentation for HMRC compliance
- Advise on timing purchases to optimise relief
Final Thoughts
Claiming capital allowances on business assets is a smart way to reduce your tax bill in 2025. Whether you’re investing in new equipment or upgrading your workspace, understanding how the rules apply can make a big difference.
Speak to Eclat Accountancy today to ensure your capital expenditure delivers maximum tax efficiency.
