capital allowances

Allowances against UK income tax or corporation tax available to a business, sole trader, partnership, or limited company that has spent capital on plant and machinery used in the business. Capital allowances are also given on industrial buildings and some agricultural and commercial buildings. The level of allowances varies according to the different categories of asset. Plant and machinery qualifies for a 25% writing-down allowance and small to medium-sized businesses may claim a first-year allowance on certain assets. An allowance of 4% calculated by the straight-line method is available on industrial buildings, with no initial allowance. An allowance of 6% is also available for certain long-life assets expected to last for 25 years or more. The allowances are treated as an expense in the computation of taxable profit and the capital allowance period reflects the period during which the accounts are prepared. The estimated cost to the government of providing capital allowances under corporation tax and income tax has been estimated at about £19, 000 million annually (2003-04).

Big dictionary of business and management. 2014.

Look at other dictionaries:

  • capital allowances — For qualifying equipment (i.e. plant and machinery but also including a licence of computer software) a proportion of the capital cost can be used to relieve tax: the relevant amount is set against company revenue which would otherwise be taxable …   Law dictionary

  • capital allowances — Allowances against UK income tax or corporation tax available to a business, sole trader, partnership, or limited company that has spent capital on plant and machinery used in the business. Capital allowances are also given on industrial… …   Accounting dictionary

  • capital allowances — /ˌkæpɪt(ə)l ə laυənsɪz/ plural noun the allowances based on the value of fixed assets which may be deducted from a company’s profits and so reduce its tax liability COMMENT: Under current UK law, depreciation is not allowable for tax on profits,… …   Marketing dictionary in english

  • capital allowances — /ˌkæpɪtl ə laυənsɪz/ plural noun the allowances based on the value of fixed assets which may be deducted from a company’s profits and so reduce its tax liability COMMENT: Under current UK law, depreciation is not allowable for tax on profits,… …   Dictionary of banking and finance

  • capital allowances — The depreciation charged against profits when calculating taxable profits for corporation tax purposes, as opposed to the depreciation charge in a company s accounts. Accounting depreciation is not allowed as a deduction from profits in… …   Financial and business terms

  • capital allowances — Fin in the United Kingdom and Ireland, an allowance against income or corporation tax available to businesses or sole traders who have purchased plant and machinery for business use. The rates are set annually and vary according to the type of… …   The ultimate business dictionary

  • capital allowance — a set off for tax in relation to expenditure on capital rather than revenue. Under the Capital Allowances Act 1990, the cost of capital assets acquired by a trader for the purposes of his business may be deducted from his total profit. The nature …   Law dictionary

  • capital assets — Assets which are held other than as trading assets. + capital assets USA All property held by a taxpayer unless specifically excluded under the IRC (IRC § 1221(a)). The following types of property are generally excluded from the definition of… …   Law dictionary

  • capital expenditure — capital costs; = capital investment; = investment costs; = investment expenditure The expenditure by an organization of an appreciable sum for the purchase or improvement of a fixed asset; the amount expended would warrant the item being… …   Accounting dictionary

  • capital expenditure — capital costs; capital investment; investment costs; investment expenditure The expenditure by an organization of a significant amount for the purchase or improvement of a fixed asset; the amount expended would warrant the item being depreciated… …   Big dictionary of business and management

Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.