Capital Allowances on Commercial Property

Capital allowances give tax relief on the plant, machinery and integral features in a commercial property. Many buyers under-claim, so this is real money left on the table.

The main allowances

• Annual Investment Allowance (AIA): 100% relief on qualifying plant and machinery, up to 1 million pounds a year, for all businesses.
• Full expensing: 100% first-year relief for companies on new main-rate plant, but not on assets held for leasing.
• 40% first-year allowance: from 1 January 2026, a 40% first-year allowance on new main-rate assets that is open to unincorporated businesses and to assets held for leasing, filling the gap that full expensing leaves for landlords.
• Special-rate items: integral features such as lifts, heating, air conditioning, wiring and water systems. Companies can claim a 50% first-year allowance above the AIA; otherwise these attract a 6% writing-down allowance.
• Writing-down allowances: the main pool rate is 14% (reduced from 18% from April 2026); the special-rate pool is 6%.

Integral features are the missed win

Integral features are often overlooked because they are built into the fabric of the building. A capital-allowances survey on a purchase or refurbishment frequently uncovers unclaimed relief.

Structures too

The building itself can attract the Structures and Buildings Allowance: see SBA explained. Estimate the year-one relief with our capital allowances calculator.

What capital allowances can a commercial landlord claim?

The Annual Investment Allowance gives 100% on qualifying plant up to 1,000,000 a year. Companies can use full expensing on new main-rate assets (not leased), and a 40% first-year allowance covers leased assets.

What are integral features?

Systems such as lifts, heating, air conditioning, wiring and water systems, which qualify for special-rate allowances and are often missed without a fixtures survey.

Sources

• Capital allowances (gov.uk)
• Full expensing and 50% first-year allowance (gov.uk)