Capital Allowances and AIA | TinyTax Support

Capital Allowances and AIA

Claim tax relief on business equipment with Annual Investment Allowance (AIA). Learn what qualifies, limits, and how to enter capital allowances in TinyTax.

How do I claim capital allowances in TinyTax? Capital allowances let you claim tax relief on business equipment and assets. This guide explains the Annual Investment Allowance (AIA) and how to enter it on your CT600.

Select your company type to customise this guide:

What Are Capital Allowances?

When your company buys equipment, vehicles, or machinery, you can't deduct the full cost as a business expense. Instead, you claim capital allowances - tax relief spread over time.

The main allowance is the Annual Investment Allowance (AIA), which lets you claim up to £1,000,000 per year.

What Qualifies for AIA?

You can claim AIA on:

  • Plant and machinery - equipment used in your business
  • Computers and IT equipment - laptops, servers, software
  • Office furniture - desks, chairs, storage
  • Vehicles - vans, lorries (cars have different rules)
  • Tools and equipment - anything used for your trade
Property companies can claim AIA on:

  • Furniture and white goods - in furnished lettings (sofas, beds, washing machines)
  • Tools and equipment - for property maintenance (ladders, power tools)
  • Office equipment - if you manage properties from an office
  • Vehicles - vans used for property management (cars have different rules)
Note: You cannot claim capital allowances on the property itself or on structural improvements - only on qualifying fixtures and equipment.
Mixed income companies can claim AIA on assets used in both income streams. Equipment for your trade qualifies under trading rules; fixtures and furnishings for rental properties qualify under property rules. The total AIA limit applies across all qualifying assets combined.
ℹ Cars have separate rules and don't qualify for the full AIA. They get Writing Down Allowance instead (typically 18% per year).

How to Enter Capital Allowances in TinyTax

Step 1: Enter Your Depreciation

In the Profit & Loss section, enter your depreciation figure:

This is automatically added back in the tax computation (because depreciation isn't tax-deductible - capital allowances replace it).

Step 2: Enter Your AIA Claim

In the Tax Computation section, you'll see a "Less: Annual Investment Allowance" line. Enter the amount you're claiming for capital allowances this year:

Tax computation

Show all ▾
Trading profit before tax
Add back: Depreciation (disallowable for tax)
Add back: Disallowable expenses
Less: Annual Investment Allowance ()
165Net trading profits
315Profits chargeable to corporation tax
Tax @ 19%
440Corporation Tax Payable

The tax computation shows how your accounting profit is adjusted for tax purposes. Box numbers correspond to CT600 form fields. Specialist rows (e.g. associated companies, R&D, marginal relief inputs) live behind chevrons that open on demand or auto-open when they hold a value.

✓ Tip

The Tax Computation Flow

Here's how capital allowances affect your taxable profit:

``` Trading profit before tax £50,000 Add back: Depreciation + £5,000 (not tax-deductible) Add back: Disallowable expenses + £1,000 (e.g., entertaining) Less: Annual Investment Allowance - £5,000 (tax relief on assets) ───────────────────────────────────────── Net trading profit (Box 165) £51,000 ```

The AIA reduces your taxable profit, which reduces your corporation tax bill.

Here's how capital allowances affect your taxable profit:

``` Property income (Box 170) £50,000 Add back: Depreciation + £5,000 (not tax-deductible) Less: Annual Investment Allowance - £5,000 (tax relief on assets) ───────────────────────────────────────── Adjusted property income £50,000 ```

The AIA reduces your taxable property income, which reduces your corporation tax bill.

AIA Limits and Pro-Rating

Standard Limit

The AIA limit is £1,000,000 per year for most companies.

Short Accounting Periods

If your accounting period is less than 12 months, the limit is pro-rated:

Period LengthAIA Limit
12 months£1,000,000
9 months£750,000
6 months£500,000
3 months£250,000
TinyTax calculates this automatically based on your period dates.

Extended Periods (>12 months)

For periods longer than 12 months, TinyTax splits your filing into two CT600s — the first 12 months and the remainder. By default, AIA is split by day-ratio across both sub-periods.

If your capital expenditure landed unevenly across the two sub-periods (for example, all of it in the second half), you can override the split. The AIA line shows your total claim with a slider beneath it — drag the slider, or click either £ amount to type a value directly. The two amounts must sum to your total AIA claim within £1.

Annual Investment Allowance (Box 690)

Less: Annual Investment Allowance ()
Period 1 (12 months) 1 Jan 2024 – 31 Dec 2024
Period 2 (6 months) 1 Jan 2025 – 30 Jun 2025

Drag the slider to allocate AIA between the two sub-periods, or click either £ amount to type a value. The two amounts must sum to your total claim within £1.

The same per-period editing applies to Writing Down Allowance and balancing charges in the advanced capital allowances section. Each pool (main pool, special rate pool, zero-emission cars, other) has its own slider, so you can allocate the correct amount to each sub-period:

Capital allowances (extended period)

This is an extended (> 12 month) accounting period, so capital allowances are split across two CT600 submissions. Enter the total you want to claim — we'll split it across both periods on a day-ratio basis. Drag the slider beneath each total to override.
705Main pool 18% WDA on plant & machinery, vans, cars ≤50 g/km CO₂.
Period 1 (12 months) 1 Jan 2024 – 31 Dec 2024
Period 2 (6 months) 1 Jan 2025 – 30 Jun 2025
695Special rate pool 6% WDA on integral features, long-life assets, cars >50 g/km CO₂.
Period 1 (12 months) 1 Jan 2024 – 31 Dec 2024
Period 2 (6 months) 1 Jan 2025 – 30 Jun 2025
726Zero-emission cars 100% First Year Allowance on new zero-emission cars.
Period 1 (12 months) 1 Jan 2024 – 31 Dec 2024
Period 2 (6 months) 1 Jan 2025 – 30 Jun 2025
725Other allowances
Period 1 (12 months) 1 Jan 2024 – 31 Dec 2024
Period 2 (6 months) 1 Jan 2025 – 30 Jun 2025

Each pool shows a single total input. The slider beneath splits the total across both sub-periods — drag it, or click either £ amount to type a value.

ℹ If you're loading an existing extended-period filing, you may see a banner asking you to reconfirm the per-period split. This is a one-off check to make sure values that were previously day-ratioed still match your records.

What If I Spent More Than the AIA Limit?

If your capital purchases exceed £1,000,000 (pro-rated for periods shorter than 12 months):

  1. Claim the full AIA (£1,000,000) in the Annual Investment Allowance field.
  2. Open the Capital allowances chevron (click Show ▾ next to it), then enter the Writing Down Allowance on the pool balance — Main pool (18%/year) or Special rate pool (6%/year). The chevron is collapsed by default to keep the form tidy; you can also click Show all at the top of the Tax computation to expand every section at once.
  3. TinyTax routes each claim to the correct CT600 box and includes it in your tax computation automatically.

Capital allowances

705Main pool 18% WDA on plant & machinery, vans, cars ≤50 g/km CO₂.
695Special rate pool 6% WDA on integral features, long-life assets, cars >50 g/km CO₂.
726Zero-emission cars 100% First Year Allowance on new zero-emission cars.
725Other allowances

Enter the total claim for each pool. Each row is routed to the correct CT600 box automatically.

ℹ Most small companies never hit the AIA limit. If you do, consider speaking to an accountant about optimising your claims across pools.

Depreciation vs Capital Allowances

These are often confused:

DepreciationCapital Allowances
Accounting treatmentTax treatment
You choose the rateHMRC sets the rules
Reduces accounting profitReduces taxable profit
Not tax-deductibleTax-deductible
In TinyTax:
  1. Enter depreciation in P&L (your accounting figure)
  2. It's automatically added back (not tax-deductible)
  3. Enter AIA (your tax relief claim)
  4. AIA is deducted from taxable profit

Common Scenarios

"I bought a laptop for £1,000"

  1. In your P&L, you've probably depreciated it (e.g., £333/year for 3 years)
  2. Enter that depreciation in the P&L section
  3. Claim the full £1,000 as AIA this year
  4. Your taxable profit reduces by £667 more than accounting profit

"I haven't bought anything this year"

  • Enter £0 for AIA
  • Your depreciation still gets added back
  • This increases your taxable profit above accounting profit

"I claimed AIA last year but the asset is still in use"

AIA is claimed once when you buy the asset. In subsequent years:

  • Continue depreciating in your accounts
  • Don't claim AIA again on the same asset
  • The depreciation add-back happens each year

"I bought furniture for a rental property"

  1. If you depreciated the furniture in your accounts (e.g., £500)
  2. Enter that depreciation in the P&L section
  3. Claim the full cost as AIA this year
  4. Your taxable income reduces by the net difference

"I replaced a boiler in a rental property"

Repairs vs Improvements:

  • Repairs (like-for-like replacement) - Deduct as an expense in P&L, not as AIA
  • Improvements (upgrading to better) - The improvement element may qualify for AIA
⚠ Boiler replacements are usually repairs (deductible expenses) not capital items. Only claim AIA on genuine improvements or new installations where none existed before.

"I bought white goods for a furnished let"

Washing machines, fridges, and similar items qualify for AIA. Claim the full cost in the year of purchase.

What About Cars, Pools, and Writing Down Allowance?

The Annual Investment Allowance field is for AIA only — 100% relief on qualifying plant and machinery, capped at £1,000,000.

For anything else — cars, pool balances brought forward, Writing Down Allowance, First Year Allowance, full expensing, balancing charges — open the Capital allowances chevron in the Tax computation section (click Show ▾ next to that heading). Each claim has its own row, so TinyTax routes it to the correct CT600 box:

Capital allowances

705Main pool 18% WDA on plant & machinery, vans, cars ≤50 g/km CO₂.
695Special rate pool 6% WDA on integral features, long-life assets, cars >50 g/km CO₂.
726Zero-emission cars 100% First Year Allowance on new zero-emission cars.
725Other allowances

Enter the total claim for each pool. Each row is routed to the correct CT600 box automatically.

Cars have special rules:

CO2 emissionsAllowanceWhere to enter
0 g/km (electric)100% First Year AllowanceZero-emission cars (Box 726)
1–50 g/km18% Writing Down Allowance (main pool)Main pool (Box 705)
51 g/km+6% Writing Down Allowance (special rate pool)Special rate pool (Box 695)
Main pool covers plant, machinery, vans, and main-rate cars (18%/year reducing balance). Special rate pool covers integral features (lighting, heating, insulation), long-life assets, and higher-emission cars (6%/year). Other one-off reliefs go in the Other allowances row (Box 725) with a free-text description.

If you sold an asset for more than its tax written-down value, you may need to enter a balancing charge to claw the relief back into taxable profit. Open the Balancing charges chevron in the Tax computation section (click Show ▾ next to that heading) — it sits just below the Capital allowances chevron:

Balancing charges

A balancing charge claws money back into taxable profit when an asset is sold for more than its tax written-down value. Most filings don't have one.

710Main pool
700Special rate pool
727Zero-emission cars
730Other allowances

Only fill in a row if you sold an asset for more than its tax written-down value during the period.

ℹ Only filled-in rows flow to the CT600 — leaving rows blank is fine. Most filings don't have a balancing charge.

In the Tax computation section, you'll also see:

Add back: Disallowable expenses

Enter expenses that aren't tax-deductible:
  • Client entertaining (meals, drinks with clients)
  • Fines and penalties
  • Personal expenses put through the business
Enter expenses that aren't tax-deductible:
  • Fines and penalties
  • Personal use portion of expenses
  • Improvements incorrectly claimed as repairs

Other adjustments

For anything else that needs adjusting - enter positive numbers to add back, negative to deduct.

Verification

After entering your figures, the Tax Computation shows:

LineAmount
Trading profit before tax£50,000
Add back: Depreciation£5,000
Add back: Disallowable expenses£500
Less: Annual Investment Allowance(£5,000)
Net trading profit (Box 165)£50,500
Check that your Net Trading Profit looks correct before submitting.
After entering your figures, the Tax Computation shows:

LineAmount
Property income (Box 170)£50,000
Add back: Depreciation£5,000
Less: Annual Investment Allowance(£5,000)
Profits chargeable (Box 315)£50,000
Check that your taxable profit looks correct before submitting.

Need Help Calculating?

If you're unsure what to claim:

  • Check your fixed asset register for purchases this year
  • Review your depreciation schedule from your accountant
  • Look at invoices for equipment bought in the period
⚠ If in doubt, claim less rather than more. HMRC can query excessive claims. You can always claim unclaimed amounts in future years (using Writing Down Allowance).

Still Have Questions?

Last updated: April 2026

Was this guide helpful?