HMRC Capital Allowance Insights

What Are Businesses Claiming Capital Allowances On?

The top three most common asset types businesses claimed for were:
• IT equipment – 63%
• Office equipment – 46%
• Machinery and tools – 39%

Most businesses claimed on more than one asset type, with 71% investing in at least two qualifying assets.

Average Spend on Capital Assets

• Average investment: £278,580
• Median spend: £10,000

Highest average investments were made in:
• Construction plant – Mean: £785,280 | Median: £15,000
• Buildings & structures – Mean: £627,300 | Median: £20,000

Lowest average investments:
• IT equipment – Mean: £9,610 | Median: £2,000
• Office equipment – Mean: £3,750 | Median: £1,000

Asset Disposal and Capital Allowances

• 1 in 5 businesses (20%) disposed of assets in 2019–2020
• Mean value of disposals: £104,340
• Median value: £5,000
• Two-thirds (66%) sold assets
• 47% scrapped or destroyed them

Claiming Process: Who Actually Does the Work?

Despite claiming capital allowances, 48% of businesses couldn’t recall which specific allowance they used.
When they could:
• 29% cited the Annual Investment Allowance (AIA)
• 19% used Main Rate Writing Down Allowance
• 12% claimed Research & Development Allowances

Most businesses weren’t directly involved in identifying allowances; they relied on external advisors or accountants due to a lack of time or expertise.

The Impact of the Super-deduction

Only 24% of businesses were aware of the Super-deduction.

Awareness differed by size:
• Micro businesses – 22% awareness
• Large businesses – 67% awareness

Of those aware:
• 46% claimed or planned to claim in 2021–22
• 42% planned to claim in 2022–23

That equates to 11% and 10% of all businesses, respectively.

Did It Change Behaviour?

Yes, for some:

2021–22 claims (19% influenced):
• 12% brought investments forward
• 9% made new investments
• 6% spent more than planned

2022–23 intentions (29% influenced):
• 26% brought investments forward
• 11% spent more
• 5% made unplanned investments

Why Didn’t Some Businesses Claim?

Among non-claimants, common reasons included:
• Small-scale investments
• Lack of awareness or understanding
• Making a loss that year

Even among claimants, some were unaware of the Structures and Buildings Allowance (SBA) or avoided it due to eligibility or alternative advice.

Structures and Buildings Allowance (SBA)

Although a lot of businesses had invested in buildings and structures in 2019 and 2020, there were many that did not claim SBA as they were unaware that the allowance existed. Even amongst those who were aware of it, there were some who didn’t claim the allowance because the type of investment did not (or they believed it did not) meet the eligible criteria for claiming.

What Does This Mean for Accountants?

Many businesses miss out on valuable tax reliefs due to:
• Poor awareness
• Relying on generalist advice
• Lack of specialist support

Accountants can help by:
• Educating clients
• Reviewing historic expenditure
• Referring to capital allowance specialists

As Chris Booth, Partner at a general practice, explains:

“Like many other general practitioners, we thought that we knew all the important stuff about capital allowances… after Paul Roberts had finished with us we realised there was a whole lot more to be claimed than we first thought! In fact, CARS identified £58,000 of capital allowances over and above what we had already identified on a building with a cost of £400,000. For those of you who own commercial property or who have clients who own commercial property you simply must ensure that you/they have claimed as much as possible because if you don’t, somebody else will! Being able to tap into a specialist organisation that does all the technical and research work for you is a huge relief and makes you stand out compared to the competition.”

This highlights how even experienced professionals can benefit significantly from working with capital allowance specialists, not only for maximising claims, but also for elevating client service and staying competitive.

We Can Help

We help accountants identify embedded capital allowances in commercial properties and complex assets, unlocking substantial tax savings.