Capital allowances for property owners: fixtures, plant and structures

Capital allowances are tax relief for the cost of certain assets that you cannot deduct as an ordinary expense. In a commercial building, that can mean fixtures such as heating, lighting, lifts and air conditioning, which are treated as plant and machinery, plus a separate allowance for the building itself in some cases. They reduce taxable profit or income of the owner.

Often yes, on fixtures that were already in the building, even though you did not install them. The amount you can claim depends on the value attributed to the fixtures and on whether the previous owner dealt with them correctly. Acting early matters, because elections and apportionments have time limits and a survey can be needed to identify what qualifies.

It is a joint election between buyer and seller, made under section 198 of the Capital Allowances Act 2001, which fixes the part of the price attributed to the fixtures. It sets both sides' tax position. It must normally be made within two years of the buyer acquiring the interest, it is irrevocable, and the notice goes to HMRC with the details of the fixtures and each party's tax reference.

For transfers on or after April 2014, a buyer can only claim plant and machinery allowances on fixtures if the seller has pooled their qualifying expenditure on those fixtures, which means claiming it in a pool, for example through the annual investment allowance. If the seller never did, the buyer cannot claim, so it should be dealt with in the deal documents.

The structures and buildings allowance (SBA) gives relief at 3% a year, over 33 and a third years, on the cost of constructing or renovating qualifying non-residential buildings where construction began on or after 29 October 2018. It does not cover land or residential use. It passes to the next owner, who claims on the remaining period, subject to having the right records.

The annual investment allowance (AIA) is £1 million for each accounting period, pro-rated for periods that are not 12 months. It gives 100% relief up front on qualifying plant and machinery. It is not available on business cars or on items you owned for another purpose before using them in the business, or given to you. Partnerships with a company member cannot use it.

The main pool rate fell from 18% to 14% on a reducing balance, from 1 April 2026 for companies and 6 April 2026 for income tax, with a hybrid rate for accounting periods that span the date. The special rate pool, which includes integral features like lifts and air conditioning, stays at 6%. This slows relief on assets that are not covered by the AIA.

The usual candidates are heating and cooling systems, lighting, lifts, hot and cold water systems, electrical systems, fire alarms and sprinklers and some fixtures such as sanitary ware in commercial premises, depending on use. Many fall into the special rate pool at 6%, although the AIA can still give full relief up front. A survey identifies what is there.

Not on plant provided for use in a dwelling house. Section 35 of the Capital Allowances Act 2001 excludes it. Instead, landlords get relief for replacing domestic items such as furniture or white goods. Communal areas in a block of flats are treated differently, so a block with shared corridors and lifts can still have claims.

The furnished holiday lettings regime ended from 6 April 2025 for income tax and 1 April 2025 for corporation tax. New expenditure on furniture and equipment no longer qualifies for capital allowances and replacement of domestic items relief applies instead. Existing pools can continue to be written down. Anti-forestalling rules caught some contracts from March 2024.

The sale can produce a balancing adjustment on the fixtures: a balancing charge if the value fixed is more than the tax value you have left, or an allowance if it is less. A section 198 election fixes the figure for both sides. Without one, the position can be uncertain and HMRC can challenge it, so address it in the contract.

Not on those fixtures for transfers since April 2014 unless the seller has pooled the expenditure. There is no fixed deadline for the seller to pool, so the contract can require them to do so as a condition of the sale. Earlier sales are different, so check when the fixtures changed hands before assuming a claim.

Yes, they interact. For CGT the fixtures are part of the building, so the whole price and cost normally go into the gain calculation, and allowances you have claimed do not reduce your base cost where there is a gain. They can, however, restrict a capital loss under section 41 of the Taxation of Chargeable Gains Act 1992. The figure agreed for the fixtures also sets your capital allowances disposal value, so we look at both sides together.

A company claims allowances in its corporation tax computation, which reduces taxable profit. The company can also claim the AIA if it is not in a group that already uses it up, with the allowance shared between related companies. For companies in a group, the allocation of the AIA between them needs planning.

For a commercial purchase of any size, usually yes. A capital allowances surveyor identifies fixtures and values them, and the report supports the claim if HMRC checks. It is not required by law, but a poorly supported claim is the easiest to challenge. Costs are normally small compared to the relief at stake.

Often yes, but there are time limits. For individuals, a claim can generally be made or amended up to the first anniversary of the 31 January filing deadline for the tax year, and companies have a time limit for amending their tax returns. Missing claims from past purchases are common, particularly where the seller did not pool, so a review of earlier acquisitions is worthwhile. Each claim depends on the facts.