Capital Allowance in United Kingdom

Definition of Capital Allowance

In accordance with the work A Dictionary of Law, this is a description of Capital Allowance : A tax allowance for businesses on capital expenditure on particular items. These include *machinery and plant, industrial buildings, agricultural buildings, mines and oil wells, energy-saving equipment, and scientific equipment. For other types of expenditure neither the capital cost nor the depreciation is allowable against tax. The percentage of the expenditure allowed varies (up to 100%) according to the type of expenditure. If a business’s capital allowances exceed its profit, it may carry forward the balance for setting against future profits.