03 Feb 2026
Changes to Capital Allowances in 2026
Find out how Capital Allowances are changing from 2026 and the impact on business tax relief for plant and machinery investments.
Learn more
Changes to Capital Allowances in 2026
Following the recent news that the UK Corporation Tax take has surged by 58% over the past five years, reaching a staggering £88 billion, many business owners are revaluating their tax strategies. If you’re looking to reduce your company’s tax bill, the TC Group tax experts share their top tips and planning measures you should consider.
Before diving in, it’s essential to understand that spending money solely to save on tax isn’t commercially sensible. The benefits are limited to the tax saving.
For example, a company paying 25% Corporation Tax will save 25p for every £1 spent.
Therefore, any expenditure should primarily serve a business need.
If your business requires new equipment, technology, or other investments, consider making these purchases before the end of the financial year.
By doing so, you can take advantage of tax deductions sooner, reducing your current tax bill.
Reviewing and possible accelerating planned expenditures can help to optimise your tax position, if you follow the golden rule above of spending wisely.
One effective way to reduce your tax payable is through Capital Allowances. Most businesses claim basic Capital Allowances on standard trade equipment such as plant and machinery, but many miss out on valuable lesser known property reliefs available to them.
Capital Allowances are also claimable on the value of the fixtures & fittings in your commercial property (owned or rented) which you’ve purchased or installed as part of refurbishment or fit out projects. Typically, this includes elements such as air conditioning, electrical systems, heating, lighting, sanitaryware and security systems.
They’re a great way for commercial property owners and occupiers who are UK tax payers to reduce the tax payable by your business, and can result in significant rebates of overpaid tax.
Specialist advice is recommended to maximise on these types of claims. Our Tax and Property Advisory teams are experienced in identifying and claiming capital allowances, ensuring you don’t miss out on valuable reliefs and rebates.
Innovation Tax Reliefs, such as R&D tax credits, also offer significant tax reductions for companies engaged in research or development.
A company can claim R&D Tax Relief if it undertakes qualifying activity which overcomes an existing problem by developing or enhancing a product, service or process.
Although HMRC has tightened the rules in recent years, substantial claims are still possible for qualifying R&D expenditures. Even if the advancement sought by the activity is not achieved, if costs have been incurred as part of the research and development, a claim may still be valid.
Our dedicated Innovation Tax Reliefs team can help you identify eligible activities and expenses, and support you throughout the whole process with a robust claim.
If there’s any uncertainty as to whether a project or activity qualifies, speak to us for advice with a free, no-obligation consultation.
With the increasing Corporation Tax take, leveraging all available reliefs and deductions is more critical than ever. Strategic tax planning requires a thorough understanding of your business needs and the tax landscape.
Our teams at TC Group are ready to support you in navigating the complexities of tax planning, ensuring you capitalise on every available opportunity to reduce your tax bill, so you can keep more of your hard-earned profits.
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