Capital allowances

Capital is often a misunderstood concept for many business owners, and at RSM Ireland it is our experience that when submitting their tax returns, many businesses fail to claim the full amount of capital allowances they are entitled to.

We can help you identify your business' full entitlement and ensure the correct allowances are claimed on your tax return.

View our Capital Allowances Brochure

So what are capital allowances?

Capital allowances are similar to tax deductible trade expenses. They are available on qualifying expenditure incurred on assets used in and for the purpose of the trade, and they allow the tax payer to write off the cost of the assets against their income over a specified period of time, typically 8 years. Some examples of capital allowances that can be claimed include:

  • Wear and tear on qualifying plant & machinery and fixtures and fittings - usually at 12.5% over 8 years;
  • Industrial buildings allowances on qualifying buildings - typically claimed at 4% over 25 years;
  • Energy efficient capital allowances on qualifying equipment - can be claimed in full (100%) in year of purchase;
  • Look back claims - under-claimed allowances in prior years can be amended and the difference claimed within a 4 year window.

It is important to note that any unused capital allowances in an accounting period can be carried forward indefinitely and used to shelter any future profits of the trade.

What assets can capital allowances be claimed on?

The area of Capital allowances can be a mine-field and there is no Revenue approved list of assets that do or may qualify for the allowances. Below is a non-exhaustive list of assets upon which capital allowances can be claimed:

Properties/Buildings:

  • Acquisition of new or second hand properties/buildings;
  • The fit out, refurbishment and extension of properties including:
    • Offices
    • Warehouse units
    • Retail units
    • Factories
    • Hospitals
    • Hotels
    • Restaurants
    • Nursing homes
    • Rental properties
  • Plant & Machinery used in a trade:
    • Computer equipment
    • Office furniture
    • Certain motor vehicles
    • Shelving
    • Tools
    • all other assets that are in use in the trade at the annual balance sheet date

How can we help?

At RSM we can help your business quantify a future claim in advance by performing an on-site review of your business assets.

We are also available to discuss any capital expenditure projects you may be planning or have ongoing to help you identify actual capital allowance qualifying expenditure.