Capital Allowances on CT600: Claiming for Equipment, Vehicles & Computers

Capital Allowances on CT600: Claiming for Equipment, Vehicles & Computers

If your limited company has purchased equipment, vehicles, computers, or other business assets, you're almost certainly entitled to capital allowances — tax relief that reduces your corporation tax bill.

But claiming capital allowances correctly on your CT600 is one of the most confusing parts of UK corporation tax. The rules are complex, rates vary by asset type, and getting it wrong means either overpaying tax or triggering an HMRC enquiry.

This comprehensive guide explains every type of capital allowance available to UK limited companies in 2025/26, exactly which CT600 boxes to complete, and the most common mistakes directors make.

What Are Capital Allowances?

Capital allowances are the tax equivalent of depreciation. When your company buys a capital asset (something with lasting value, like a laptop, vehicle, or piece of machinery), you can't deduct the full cost as a business expense in one go.

Instead, you claim capital allowances — which let you deduct the cost over time (or sometimes immediately) against your taxable profits.

Key principle: Capital allowances replace accounting depreciation for tax purposes. Your accounts may show depreciation of £5,000, but for your CT600, you add back depreciation and instead claim capital allowances.

Why this matters: If you forget to claim capital allowances, you lose the tax relief. And if you claim incorrectly, HMRC may charge penalties. Our CT600 box-by-box guide covers where each figure goes.

Types of Capital Allowance for Limited Companies (2025/26)

1. Annual Investment Allowance (AIA) — 100% First-Year Relief

The AIA lets you deduct the full cost of qualifying plant and machinery in the year of purchase, up to a limit.

Key facts:

• Current limit: £1,000,000 per year (permanent since April 2023)
• Applies to: Most plant and machinery, including computers, office furniture, tools, and commercial vehicles
• Does NOT apply to: Cars, assets bought from connected parties, or assets received as gifts

For the vast majority of small and medium companies, the £1M AIA limit means you can claim 100% relief on all your equipment purchases in a single year. Very few SMEs spend over £1M on plant and machinery annually.

Example: Your company buys a £15,000 van and £3,000 of office equipment. You claim AIA of £18,000, reducing your taxable profits by £18,000. At the 25% corporation tax rate, that saves you £4,500 in tax.

Calculate your savings: Use our corporation tax calculator to see how capital allowances affect your tax bill.

2. Full Expensing — 100% Relief on New Plant and Machinery

Full expensing was introduced in April 2023 and made permanent from April 2024. It provides:

• 100% first-year allowance on qualifying new (not second-hand) main-rate plant and machinery
• 50% first-year allowance on qualifying new special-rate assets (e.g., long-life assets, integral features)

Full expensing vs. AIA — what's the difference?

For most SMEs, AIA is sufficient. Full expensing mainly benefits larger companies spending over £1M per year on new equipment.

3. Writing Down Allowances (WDA) — For Assets Not Covered by AIA

If you don't use AIA (or exceed the limit), remaining assets go into pools and are written down over time:

Main rate pool — 18% per year (reducing balance)

• General plant and machinery
• Computers and IT equipment
• Office furniture
• Commercial vehicles (but not cars — see below)
• Tools and instruments

Special rate pool — 6% per year (reducing balance)

• Long-life assets (useful economic life of 25+ years)
• Integral features of buildings (electrical systems, heating, lifts, etc.)
• Thermal insulation
• Cars with CO₂ emissions above 50 g/km

Example of WDA (main rate):

As you can see, WDA gives slower relief than AIA. Always use AIA first for maximum tax benefit.

4. First-Year Allowances (FYA) — Special Categories

Several types of assets qualify for enhanced first-year allowances:

Zero-emission cars — 100% FYA

• New, unused cars with zero CO₂ emissions (fully electric or hydrogen)
• Available until at least March 2026
• Claimed in the year of purchase

Zero-emission goods vehicles — 100% FYA

• New, unused electric vans and commercial vehicles
• Available until at least March 2026

Energy-saving and water-efficient equipment

• Equipment on HMRC's Energy Technology List or Water Technology List may qualify for 100% FYA

5. Capital Allowances on Cars — Special Rules

Cars have their own capital allowance rules, which catch many directors out:

Important restrictions on cars:

• Cars never qualify for AIA — regardless of their emissions or cost
• Second-hand cars get WDA, not FYA (even if they're electric)
• Cars used partly for non-business purposes need private use adjustments

Example: Your company buys a new electric car for £40,000. You claim 100% FYA, deducting the full £40,000 from taxable profits. Tax saving: £10,000 (at 25% CT rate).

Your company buys a diesel car for £25,000 (CO₂ over 50 g/km). It goes in the special rate pool at 6% WDA, giving you only £1,500 relief in year one. It takes over 15 years to claim most of the cost.

6. The Super Deduction — Legacy Claims

The 130% super deduction ended on 31 March 2023. However, if your company purchased qualifying assets before that date:

• The asset is now in your capital allowance pools
• You may have a balancing adjustment when you dispose of the asset
• Disposal proceeds for super-deduction assets are brought into account at a special rate

If you're still dealing with super-deduction assets in your pools, be careful with the disposal calculations. HMRC's guidance on super deduction disposals explains the special balancing charge rules.

Which CT600 Boxes to Complete for Capital Allowances

Getting the CT600 boxes right is critical. Here's where capital allowances appear:

Core CT600 Boxes

In Your Tax Computation

Your tax computation (the iXBRL document filed with your CT600) should show:

1. Depreciation added back — the accounting depreciation in your P&L is added back to profit
2. Capital allowances deducted — the total from Box 128 is deducted from adjusted profit
3. Net effect — the difference between depreciation add-back and capital allowances claimed

Example:

• Accounting profit: £50,000 (after £8,000 depreciation)
• Add back depreciation: +£8,000
• Deduct capital allowances (AIA): -£15,000
• Adjusted taxable profit: £43,000
• Corporation tax at 25%: £10,750 (instead of £12,500 without AIA — saving £1,750)

Taxpipe handles this automatically. Enter your asset purchases and our software calculates the optimal capital allowances and fills in the correct CT600 boxes. Try it now →

Capital Allowances Computation — Detailed Breakdown

Your capital allowances computation should be structured as follows. This is what HMRC expects to see in your iXBRL tax computation:

Step 1: Opening Pool Values

Bring forward the closing pool balances from your previous accounting period.

Step 2: Additions

Add the cost of new assets purchased during the period to the appropriate pool:

• Main rate pool: general plant and machinery (18% WDA)
• Special rate pool: integral features, long-life assets, high-emission cars (6% WDA)
• Single asset pools: cars with private use, short-life asset elections

Step 3: Claim AIA

Deduct AIA on qualifying additions (up to £1M). AIA is claimed first and reduces the additions going into pools.

Step 4: Claim FYA / Full Expensing

For qualifying new assets, claim first-year allowances or full expensing. These assets don't go into the general pools.

Step 5: Disposals

Deduct any proceeds from disposing of assets during the period. If proceeds exceed the pool value, you have a balancing charge (taxable profit).

Step 6: Calculate WDA

Apply writing down allowances to the remaining pool balances:

• Main rate: 18% of pool balance (reducing balance)
• Special rate: 6% of pool balance (reducing balance)

Step 7: Small Pools Allowance

If a pool balance is £1,000 or less, you can claim the entire balance as a small pools allowance instead of WDA. This clears the pool entirely.

Step 8: Total Capital Allowances

Sum all allowances (AIA + FYA + WDA + small pools + balancing allowances) minus any balancing charges. This is your Box 128 figure.

Common Capital Allowance Mistakes on CT600

Mistake 1: Claiming AIA on Cars

Wrong: "I bought a company car for £30,000, so I'll claim £30,000 AIA." Right: Cars never qualify for AIA. They go into either the main rate pool (1–50 g/km CO₂) or the special rate pool (over 50 g/km). Only zero-emission cars get 100% FYA.

Mistake 2: Forgetting to Add Back Depreciation

Wrong: Claiming capital allowances but leaving accounting depreciation in the tax computation. Right: Always add back the depreciation charge from your P&L, then deduct capital allowances instead. These are two separate adjustments.

Mistake 3: Claiming Full Expensing on Second-Hand Assets

Wrong: "I bought a used machine for £50,000 — I'll claim full expensing." Right: Full expensing only applies to new, unused assets. Second-hand assets qualify for AIA or WDA, but not full expensing.

Mistake 4: Not Claiming Capital Allowances At All

Shockingly common. Some directors just leave depreciation in their accounts and don't claim capital allowances on the CT600 at all. This means overpaying corporation tax — sometimes by thousands of pounds.

If your company owns any equipment, vehicles, computers, or tools, you should almost certainly be claiming capital allowances.

Mistake 5: Wrong Pool Allocation

Putting assets in the wrong pool (e.g., integral features in the main rate pool at 18% instead of the special rate pool at 6%) can trigger HMRC enquiries.

Mistake 6: Missing Short Accounting Periods

If your accounting period is shorter than 12 months, WDA and AIA are reduced proportionally. A 6-month period only gets half the normal AIA (£500,000 instead of £1,000,000) and half the WDA rate.

Mistake 7: Not Claiming the Small Pools Allowance

If your main or special rate pool balance is £1,000 or less, claim the whole thing instead of continuing to apply WDA. The small pools allowance clears minor balances efficiently.

Avoid these mistakes. Taxpipe's guided CT600 flow prompts you through capital allowances step by step, with validation to catch errors before submission. Just £59 per return.

Practical Examples

Example 1: Freelance IT Contractor (Ltd Company)

Purchases this year:

• MacBook Pro: £3,200
• Monitor and peripherals: £800
• Desk and chair: £600

Capital allowances claim:

• Total qualifying spend: £4,600
• Claim: AIA £4,600 (100% in year 1)
• Tax saving at 25%: £1,150

All items are plant and machinery eligible for AIA. No special rules apply.

Example 2: Construction Company

Purchases this year:

• Excavator: £85,000
• New electric van: £42,000
• Diesel truck: £55,000 (CO₂ > 50 g/km — but commercial vehicles, not cars)

Capital allowances claim:

• Excavator: AIA £85,000
• Electric van: AIA £42,000 (or 100% FYA as zero-emission goods vehicle)
• Diesel truck: AIA £55,000 (commercial vehicles qualify for AIA, unlike cars)
• Total: AIA £182,000
• Tax saving at 25%: £45,500

Example 3: Company Car Purchase

Purchase:

• BMW 3 Series (petrol, CO₂ 130 g/km): £38,000

Capital allowances claim:

• Car does not qualify for AIA
• CO₂ > 50 g/km → special rate pool (6% WDA)
• Year 1 WDA: £2,280
• Tax saving in year 1 at 25%: £570

Compare this to buying a Tesla Model 3 (0 g/km) for similar money:

• 100% FYA in year 1: £38,000
• Tax saving at 25%: £9,500

The tax difference is £8,930 in year one alone. This is why electric company cars are so tax-efficient.

Example 4: Mixed Purchases Over £1M

Large manufacturing company purchases:

• New CNC machines: £800,000
• Factory electrical rewiring (integral feature): £300,000
• New forklift trucks: £150,000

Capital allowances claim:

• AIA on first £1,000,000 of qualifying spend — allocate to main-rate items first (CNC machines £800,000 + forklifts £150,000 = £950,000 AIA, plus £50,000 of rewiring)
• Remaining rewiring (£250,000): claim 50% full expensing (special-rate new asset) = £125,000
• Or: put remaining £250,000 into special rate pool at 6% WDA = £15,000
• Optimal strategy: Use AIA on main-rate items, then full expensing (50%) on remaining special-rate items

This is where the interaction between AIA and full expensing gets complex. Taxpipe calculates the optimal allocation automatically.

Capital Allowances and the CT600 Supplementary Pages

Most straightforward capital allowance claims don't require supplementary pages. However, some situations do:

• CT600C (Group relief): If capital allowances create a loss that's surrendered to another group company
• CT600E (Charities): Different rules apply for charitable companies
• CT600H (Cross-border royalties): Relevant if capital assets generate royalty-type income

For most small companies, the core CT600 boxes (118–128) are sufficient. Read our guide on CT600 supplementary pages if you're unsure.

Record-Keeping Requirements

HMRC requires you to keep records supporting your capital allowance claims. For each asset, retain:

• Purchase invoice showing the date, cost, and description
• Payment evidence (bank statement, credit card receipt)
• Details of business use (especially for cars with mixed use)
• Asset register listing all assets, purchase dates, costs, and pool allocations
• Disposal records when you sell, scrap, or give away an asset

Records must be kept for 6 years from the end of the accounting period. HMRC can request these records during an enquiry, and failure to produce them can result in estimated assessments and penalties.

Disposing of Assets: Balancing Charges and Allowances

When you sell, scrap, or give away an asset, you need to account for the proceeds in your capital allowance pools:

Sale Proceeds < Pool Value → Balancing Allowance

If you sell an asset for less than its pool value, you can claim a balancing allowance on the difference. This is additional tax relief.

Sale Proceeds > Pool Value → Balancing Charge

If you sell an asset for more than its pool value, you have a balancing charge. This is added to your taxable profits (entered in CT600 Box 126).

Sale Proceeds Capped at Original Cost

Even if you sell an asset for more than you paid, proceeds are capped at the original cost for capital allowance purposes. Any profit above original cost is a capital gain, not a balancing charge.

Example:

• Asset purchased for £10,000, fully relieved via AIA
• Pool value: £0
• Sold for £6,000
• Balancing charge: £6,000 (added to taxable profits)
• Tax payable: £1,500 (at 25%)

Frequently Asked Questions

Can I claim capital allowances on a laptop?

Yes. Laptops, desktops, tablets, and all computer equipment are plant and machinery. You can claim AIA (100% in year 1) on the full cost, up to the £1M annual limit.

Do I need to claim capital allowances, or can I just deduct the cost as an expense?

For capital items (assets with lasting value), you must use capital allowances rather than deducting the cost as a revenue expense. Revenue expenses (things consumed quickly, like stationery or software subscriptions) are deducted directly. The distinction is based on whether the item has enduring benefit to the business.

What happens if I don't claim capital allowances?

You overpay corporation tax. Unclaimed capital allowances are generally lost — you cannot go back to previous years to claim them (though you can amend your CT600 within the 12-month window).

Can I claim capital allowances on a car bought personally?

No. Capital allowances can only be claimed on assets owned by the company. If you buy a car personally and use it for business, the company can reimburse your mileage at HMRC approved rates instead.

What's the difference between AIA and full expensing?

AIA has a £1M annual limit but covers both new and second-hand assets. Full expensing has no annual limit but only covers new, unused main-rate assets (100%) and new special-rate assets (50%). For most SMEs, AIA is sufficient.

Do capital allowances apply to leased equipment?

It depends on the type of lease. Hire purchase: you claim capital allowances as if you owned the asset. Operating lease: you deduct the lease payments as a revenue expense instead — no capital allowances. Finance lease: treated similarly to hire purchase for capital allowance purposes.

How do capital allowances work with the small profits rate?

If your company's taxable profits are below £50,000, you pay corporation tax at 19% (small profits rate). Capital allowances still apply in the same way, but the tax saving per pound of allowance is 19p rather than 25p. If your profits fall between £50,000 and £250,000, marginal relief applies, and capital allowances can be especially valuable because the effective marginal rate is 26.5%.

Can I claim capital allowances on building renovations?

Generally, no — buildings and land don't qualify for plant and machinery capital allowances. However, integral features (electrical systems, heating, air conditioning, lifts, external solar shading) and fixtures (fitted kitchens in commercial property, sanitary ware) do qualify. You may also be able to claim Structures and Buildings Allowance (SBA) at 3% per year on new commercial construction.

Key Takeaways

• Always claim capital allowances on business equipment — failure to claim means overpaying tax
• Use AIA first — it gives 100% relief up to £1M, covering most SME purchases
• Cars have special rules — no AIA, and relief depends on CO₂ emissions
• Add back depreciation in your tax computation and replace with capital allowances
• Keep detailed records — HMRC expects invoices, asset registers, and disposal documentation
• Consider full expensing for large purchases of new equipment above the £1M AIA limit
• Claim the small pools allowance to clear pool balances of £1,000 or less

Let Taxpipe handle the complexity. Our guided CT600 filing calculates capital allowances automatically, fills the right boxes, and generates HMRC-compliant iXBRL — all for just £59. Start filing now →

This guide is for informational purposes only and does not constitute tax advice. Capital allowance rules are complex and depend on your specific circumstances. If you have significant capital expenditure or unusual assets, consider consulting a qualified tax adviser. Taxpipe is a CT600 filing tool — we help you file accurately, but we don't provide advisory services.

Last updated: February 2026

Related Reading

• Capital Allowances for Small Companies — AIA, Full Expensing & Cars
• Annual Investment Allowance (AIA): Claim Up to £1 Million in Tax Relief
• Company Cars & Corporation Tax: Capital Allowances, BIK, and CT600 Treatment