Capital allowances are the tax relief you get for buying assets your business keeps and uses — machinery, plant, commercial vehicles, equipment. You cannot deduct the purchase price as an ordinary expense, so instead the rules let you write some or all of the cost off against your taxable profits, either in one go or gradually over several years.
They exist because tax law separates day-to-day running costs from capital spending. Fuel, wages and insurance are expenses and come straight off your profit. A telehandler or a CNC machine is capital, so it goes through the capital allowances system instead.
In broad terms there are three routes. Some spending can be written off in full in the year you buy it, through the Annual Investment Allowance or one of the first-year allowances. Some is written down a bit at a time in a pool, at a percentage of the pool balance fixed by legislation. And some assets — cars, long-life items, certain fixtures — sit in pools of their own with their own rules.
What qualifies, what is excluded, the pool rates and the limits on each allowance are all set by legislation and are revised at Budgets and in Finance Acts. Look up the rules in force for your accounting period on gov.uk before you rely on a figure. Our capital allowances page explains how the different agreement types interact with the system, but the calculation itself belongs with your accountant.
This is general information, not tax advice. Confirm your own position with your accountant or HMRC.