This is a guide for subscribers.

What are qualifying activities for capital allowances purposes?

Qualifying activities are:

  • A trade.
  • A property business (UK or overseas).
  • A furnished holiday lettings business (UK or within the European Economic Area).
  • A profession or vocation.
  • An employment or office.
  • Special leasing of plant and machinery.
  • Managing the investments of a company with investment business.
  • A concern in mines or transport undertakings.

Expenditure for use in a dwelling house

Capital allowances can be claimed on plant and machinery used in some types of dwelling houses. See Dwelling house for capital allowances for more information.

Officeholders and employees

Where the qualifying activity is an employment (or office), no capital allowances may be claimed on expenditure on motor vehicles and cycles.

Mixed-use assets

Capital allowances can be claimed for assets which are used for qualifying activities and for private purposes, subject to a restriction for the private use which is worked out on any reasonable basis.

Small print

Prior to April 2016 a wear and tear allowance could be claimed for furnished properties, see Wear and Tear Allowance and renewals basis.

From April 2016 the wear and tear allowance was abolished and Replacement of Domestic Items Relief was introduced instead.

In Hora Tevfik v HMRC [2019] TC07383, the First Tier Tribunal denied claims for capital allowances on the communal areas of HMO properties. The claims made were described as relating to communal, common parts, installations and shared areas but with no split between the different elements. Although invited to do so by HMRC, Mr Tevfik did not revise his claims so as to relate to common parts of the buildings only.

Capital Allowances Act (CAA) 2001 section 15


22 March 2016 minor changes made, links updated, small print section added.

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