Capital Allowance

English Legal System: Capital Allowance

In the context of the English law, A Dictionary of Law provides the following legal concept 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.