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Capital allowances provide tax relief for capital expenditure by prescribing a statutory rate of depreciation for tax purposes, in place of that used for accounting purposes. They are used by the government to provide an incentive to invest in capital equipment, including commercial property, by allowing the majority of taxpayers a deduction from taxable profits for certain types of capital expenditure, thereby deferring tax liabilities. Where none of the forms of capital allowances that are available apply, the capital expenditure remains non-deductible.

This section is maintained by Andrew Green of Davis Langdon and Cavat Consulting.