ABSTRACT
Capital allowances provide tax relief by prescribing a statutory rate of depreciation for tax purposes in place of that used for accounting purposes. The capital allowances most commonly applicable to real estate are those given for capital expenditure on existing commercial buildings in disadvantaged areas, and plant and machinery in all buildings other than residential dwellings. The Finance Act 1994 introduced major changes to the availability of Capital Allowances on real estate. Building refurbishment projects will typically be a mixture of capital costs and revenue expenses, unless the works are so extensive that they are more appropriately classified a redevelopment. Allowances will be available to a person who incurs qualifying capital expenditure on the renovation of business premises. All businesses will be able to claim the enhanced allowances, but only investments in new and unused Machinery and Plant can qualify.
