capital-allowances

---
name: capital-allowances
description: Turns your capital purchase invoices for the year into a written capital allowances claim for every single item: plant and machinery sorted from structures, buildings and cars, the Annual Investment Allowance applied up to its GBP 1,000,000 cap, full expensing or the 50 percent first year allowance applied where the business is a company, whatever is left routed into the correct writing down allowance pool at the rate actually in force this year, the Structures and Buildings Allowance worked out for any construction or renovation spend, a private use adjustment for any asset with mixed business and personal use, an evidence register naming the invoice behind every figure, and a gaps list. Use when you have bought equipment, a vehicle, kitchen kit or shopfitting, or renovated or extended the premises, and you need to know which allowance route each cost actually qualifies for before your accountant finalises the return.
---

# Every piece of kit you bought this year, claimed on the allowance route that actually applies to it, not the one that applied last year

You give this your capital purchase invoices for the accounting or tax year, a note of whether the business is a limited company or a sole trader or partnership, and, for any asset with private use, your best estimate of the business use percentage. You get back an asset register that sorts every item into the right category, plant and machinery, structures and buildings, or cars, and then applies the allowance that actually fits it this year: the Annual Investment Allowance up to its cap, full expensing or the 50 percent first year allowance where the business is a company, a writing down allowance at the rate in force this year for anything left over, or the Structures and Buildings Allowance for construction and renovation spend. It will not choose between AIA and full expensing where both are available and the choice depends on the company's wider tax position, and it will not claim more than one allowance against the same expenditure. Those are decisions for the accountant, made with information this skill does not hold, such as whether the company expects a loss this year or next.

## What it does

1. **Enumerate every capital item bought in the year, from the invoice, not from memory.** Pull every purchase invoice for equipment, kitchen kit, furniture, a vehicle, a till system, or any construction, extension or renovation work on the premises. For each one record the supplier, the invoice date, the item description exactly as invoiced, the cost excluding VAT, and whether the item is new or second hand. A claim built from a bank statement line instead of the invoice behind it is a claim with no evidence attached, and HMRC's own capital allowances helpsheet HS252 is explicit that the allowance statement and its supporting evidence are what a check into the claim will ask for.

2. **Sort every item into plant and machinery, cars, or structures and buildings, because each one runs through a completely different allowance.** Capital allowances guidance describes plant and machinery as "equipment, machinery, business vehicles, for example vans, lorries or business cars", but cars are then carved straight back out of the two most generous reliefs: HS252 states plainly that "you cannot claim AIA for the cost of cars", and the full expensing guidance excludes them by name, allowing companies to claim "100% of the cost of main rate plant and machinery, except for cars." A structural item, a shopfront, a kitchen extension, rewiring or replumbing that is part of the fabric of the building, is not plant and machinery at all and belongs in step 8 instead. Getting this sort wrong first is how a GBP 40,000 kitchen refit ends up claimed at the wrong rate for the next six years.

3. **Apply the Annual Investment Allowance first, up to its cap, to whatever plant and machinery is left after cars are excluded.** The AIA amount is GBP 1,000,000, a figure that has applied "from 1 January 2019" to sole traders, partnerships and companies alike. You can claim AIA "on most plant and machinery up to the AIA amount", but not on cars, on "items you owned for another reason before you started using them in your business", or on "items given to you or your business." A sole trader or partnership with no other allowance available will usually want every eligible item inside the AIA cap before anything moves to a pool, because AIA gives 100 percent relief in the year of purchase regardless of the item's normal writing down rate.

4. **If the business is a company, apply full expensing to new and unused main rate plant and machinery bought from 1 April 2023.** HS252 states the rule precisely: full expensing "enables companies within the charge to Corporation Tax to claim 100% of the cost of main rate plant and machinery, except for cars, in the accounting period in which the assets are bought." It only applies to new and unused items, never second hand, and only to companies, never to a sole trader or a partnership. This relief was due to end on 31 March 2026 and was instead made permanent: the Autumn Statement 2023 policy paper confirms the government legislated "to remove the 2026 end date for full expensing, in order to provide maximum certainty to businesses." A company should generally prefer full expensing over AIA for new main rate assets, because full expensing carries no cap, but this skill records the eligible amount under both routes and leaves the final choice to the accountant.

5. **For a company's new and unused special rate assets, apply the 50 percent first year allowance instead.** Special rate assets, such as long life items and integral building features like heating and lighting systems, do not qualify for full expensing but do qualify for a 50 percent first year deduction under the same new-and-unused, companies-only conditions. Record which items fall here separately from the 100 percent full expensing items, because the two are worked out and reported differently.

6. **Route everything that did not get AIA, full expensing or the 50 percent allowance into the correct pool, at the rate in force this year, not last year's rate.** The main rate pool writing down allowance changed part way through this financial year: it runs "with a rate of 14% from April 2026, and 18% before", specifically 1 April 2026 for Corporation Tax and 6 April 2026 for Income Tax. A business with an accounting period straddling that date needs a hybrid rate calculated for the two portions of the period rather than one flat percentage applied to the whole year, and a claim that quietly assumes 18 percent throughout is now wrong for part of the year. The special rate pool writing down allowance is 6 percent and did not change. Both are reducing balance rates, applied to the pool balance carried forward, not to the original cost.

7. **Restrict any asset with private use to its business use percentage, and keep it out of the pool entirely.** HS252 states the rule for a sole trader or partnership plainly: "Items of equipment, including cars, you use for both business and private purposes do not go into your main or special rate pool." A mixed use asset is kept in its own single asset pool and the allowance claimed is restricted to the business use proportion the owner states. Record the stated business use percentage against the item and flag it, because this is the figure most likely to be challenged if it is not evidenced with a mileage log, a diary, or a similarly dated record.

8. **Work out the Structures and Buildings Allowance separately for any construction, extension or qualifying renovation.** This is the route for the kitchen extension, the new dining room, or a full refit of the building fabric, none of which is plant and machinery. The rate is "3% a year from 1 April 2020" for Corporation Tax, or 6 April 2020 for Income Tax, running for "33 and one third years from the allowance period start date." Three conditions gate the claim: all construction contracts must have been "signed on or after 29 October 2018", the cost of the land itself is specifically excluded, and the building must not "have been used as a residence the first time it was used or during the period you're claiming for." A flat above the restaurant therefore falls outside this allowance even where the ground floor kitchen does not.

9. **Build the evidence register as you go, and re-read every rate and cap on the day you use it.** Against every item, record the invoice, the invoice date, and which allowance route the item was assigned to and why. A rate or a cap taken from a previous year's spreadsheet, a template, or a trade article is exactly how a business ends up claiming 18 percent on an asset bought after the rate changed to 14 percent. Open the current guidance page, read the figure, and record the figure, the tax year it applies to, 2026 to 2027 at the time this is written, and the date you read it.

10. **Hand the finished decisions to Codex and let it build the register.** Claude hands over the enumerated item list with, for every item, the category (plant and machinery, car, or structure and building), the allowance route assigned, the business use percentage, the rate applied, and the evidence document reference. Codex makes no judgement at all: it tabulates what it is given, totals it, and writes anything unanswered into the gaps list. Run it from the folder holding the invoices:

   ```
   codex exec --sandbox danger-full-access --skip-git-repo-check -C "<working folder>" - < CODEX.md
   ```

   What comes back is the asset register, the pool summary showing the opening balance, additions, disposals and closing balance for the main and special rate pools, the AIA and full expensing claim totals, the SBA schedule, the evidence register, and gaps.md, plus the counts you check in the next section.

## Then it checks

1. Every item enumerated in step 1 appears in the asset register with a category and an allowance route recorded, and the register row count equals the item count from step 1 with no unexplained difference.
2. No car appears with AIA or full expensing claimed against it, and every car is recorded through its own route or flagged to the accountant.
3. Every item claimed through AIA has its cost checked against the running total for the year, and the running total does not exceed GBP 1,000,000 without a named excess carried to the pool.
4. Every item claimed through full expensing or the 50 percent first year allowance is marked new and unused and is recorded against a company, never against a sole trader or partnership.
5. Every writing down allowance figure states which rate was used, 14 percent or 18 percent, or the calculated hybrid rate for a period straddling April 2026, and names the accounting period dates it was checked against.
6. Every asset with a business use percentage below 100 is kept out of the main and special rate pools and shows its own single asset pool with the restricted percentage named.

Any check fails: name it, redo that step once. Failed twice: say what is wrong and stop.

## Rules
- Public information only.
- Never invent a fact, a number or a quote.
- Anything sent in someone's name says whose name it is.
- Never state a typical capital spend, a typical claim value, or an average allowance recovered as a percentage of turnover for a single independent UK hospitality business. No published figure exists for one venue, and a borrowed figure invites an owner to either underclaim against a genuine invoice or chase a number that was never theirs to reach.
- Never choose between AIA, full expensing and a writing down allowance where more than one route is genuinely available for the same item. Record what each route would give and leave the choice to the accountant, because the right answer depends on the business's wider profit and loss position across more than one year, which this skill does not hold.
- Never claim more than one allowance against the same expenditure. Where an item could qualify for two routes, record both and mark which one was actually applied, never both applied together.
- Never take a rate, a cap or a percentage from a previous year's file, a template or this document itself. Open the current gov.uk guidance on the day, read the figure, and record the figure, the tax year it belongs to, and the date read. A rate that changed mid year, as the main pool rate did on 1 April 2026, needs the date checked against the accounting period, not just the calendar year.
- Never mark an item plant and machinery from its name alone. A kitchen extension and a kitchen extractor fan sit on opposite sides of the plant and machinery line, and only the invoice description and what the item physically is settles which side.
- This output is a working document prepared for the owner's own accountant or tax adviser to check before any capital allowances claim is finalised or any return is filed. It applies published law and published HMRC guidance to the facts the owner supplied. It is not tax advice, it is not a clearance, and it is not a ruling that any allowance shown is correct.

## Built from
- HM Revenue and Customs and GOV.UK, "Claim capital allowances: Overview", https://www.gov.uk/capital-allowances, no date shown on the page, read 23 September 2026: the definition of plant and machinery and the overview of AIA, writing down allowances and full expensing in step 2.
- HM Revenue and Customs and GOV.UK, "Claim capital allowances: Annual Investment Allowance", https://www.gov.uk/capital-allowances/annual-investment-allowance, no date shown on the page, read 23 September 2026: the GBP 1,000,000 cap in force from 1 January 2019 and its exclusions in step 3.
- HM Revenue and Customs and GOV.UK, "Claim capital allowances: full expensing and the 50% first year allowance", https://www.gov.uk/capital-allowances/full-expensing, no date shown on the page, read 23 September 2026: the 100 percent rate, the companies-only and new-and-unused conditions, the car exclusion, and the 50 percent first year allowance in steps 4 and 5.
- HM Revenue and Customs, "Autumn Statement 2023: Permanent full expensing", https://www.gov.uk/government/publications/full-expensing/autumn-statement-2023-permanent-full-expensing-technical-consultation, read 23 September 2026: the removal of the 2026 end date for full expensing in step 4.
- HM Revenue and Customs and GOV.UK, "Work out your writing down allowances: Rates and pools", https://www.gov.uk/work-out-capital-allowances/rates-and-pools, no date shown on the page, read 23 September 2026: the main rate pool changing to 14 percent from 1 April 2026 for Corporation Tax and 6 April 2026 for Income Tax, from 18 percent before, and the special rate pool at 6 percent, in step 6.
- HM Revenue and Customs, "HS252 Capital allowances and balancing charges (2026)", https://www.gov.uk/government/publications/capital-allowances-and-balancing-charges-hs252-self-assessment-helpsheet/hs252-capital-allowances-and-balancing-charges-2026, updated 6 April 2026, read 23 September 2026: the car exclusions from AIA and full expensing quoted in steps 2 and 4, and the mixed business and private use pooling rule in step 7.
- HM Revenue and Customs and GOV.UK, "Claiming capital allowances for structures and buildings", https://www.gov.uk/guidance/claiming-capital-allowances-for-structures-and-buildings, last updated 3 September 2020, read 23 September 2026: the 3 percent rate, the 33 and one third year allowance period, the land exclusion, the non-residential condition and the 29 October 2018 contract date in step 8.

# capital-allowances

## You are given
The enumerated list of capital items bought in the accounting or tax year for one UK hospitality business, built from purchase invoices, with the supplier, invoice date, item description, cost excluding VAT and new-or-second-hand status named against every item. A statement of whether the business is a limited company or a sole trader or partnership. For every item, the category Claude has already decided, plant and machinery, car, or structure and building, and the allowance route assigned to it: Annual Investment Allowance, full expensing, 50 percent first year allowance, main rate pool writing down allowance, special rate pool writing down allowance, single asset pool for mixed use, or Structures and Buildings Allowance. The business use percentage for any item with private use. The accounting period start and end dates, and whether that period straddles 1 April 2026 or 6 April 2026, the date the main pool writing down allowance rate changed from 18 percent to 14 percent. The opening pool balances carried forward from the previous year where they exist, and any disposals in the year with their sale proceeds. The evidence document behind each item, with a file name and a date. All judgement calls, including the category, the allowance route, the business use percentage and the choice between AIA and full expensing where both were available, have already been made and are supplied to you.

## Produce
Write into a `./capital-allowances-output/` folder:

1. `asset-register.csv` with these columns in this order: `item_ref`, `item_description_verbatim`, `supplier`, `invoice_date`, `cost_excl_vat_gbp`, `new_or_second_hand`, `category`, `allowance_route`, `business_use_percent`, `evidence_ref`. `item_ref` is A001 upward. `category` is exactly one of `plant and machinery`, `car`, `structure and building`. `allowance_route` is exactly one of `AIA`, `full expensing`, `50 percent first year allowance`, `main rate pool`, `special rate pool`, `single asset pool`, `structures and buildings allowance`. `new_or_second_hand` is exactly one of `new`, `second hand`. `business_use_percent` is a whole number from 1 to 100, and is 100 for every item with no stated private use.
2. `aia-and-full-expensing-claim.csv` with columns: `item_ref`, `allowance_route`, `cost_excl_vat_gbp`, `running_total_gbp`, `within_cap`. One row per item claimed through AIA or full expensing, in invoice date order. `running_total_gbp` is the cumulative AIA total for the year to that row. `within_cap` is `yes` or `no`, `no` for any AIA item where the running total exceeds GBP 1,000,000.
3. `pool-summary.csv` with columns: `pool`, `opening_balance_gbp`, `additions_gbp`, `disposals_gbp`, `writing_down_allowance_rate_percent`, `writing_down_allowance_gbp`, `closing_balance_gbp`, `rate_source_note`. `pool` is exactly one of `main rate pool`, `special rate pool`, plus one row per `item_ref` for every single asset pool. Where the accounting period straddles the rate change date, record the hybrid rate calculated and show the working in `rate_source_note`.
4. `sba-schedule.csv` with columns: `item_ref`, `item_description_verbatim`, `qualifying_cost_gbp`, `allowance_period_start_date`, `annual_rate_percent`, `annual_allowance_gbp`, `years_claimed_to_date`. `annual_rate_percent` is `3`.
5. `evidence-register.csv` with columns: `evidence_ref`, `supports_item_ref`, `evidence_type`, `evidence_file_name`, `evidence_date`, `notes`. `evidence_type` is exactly one of `purchase invoice`, `construction contract`, `business use record`, `disposal record`, `other document supplied`.
6. `gaps.md` a numbered list of: every item with no allowance route recorded; every item with no supporting invoice; every AIA claim where the running total exceeds GBP 1,000,000 with no excess routed to a pool; every full expensing or 50 percent first year allowance claim recorded against a sole trader or partnership rather than a company; every car recorded with AIA or full expensing claimed against it; every item with a business use percentage below 100 that is not shown in its own single asset pool; every writing down allowance rate applied with no rate source note; and any figure supplied without a date.

## Rules
- Codex tabulates, totals and cross checks only. It never decides a category, never chooses an allowance route, never sets a business use percentage and never chooses between AIA and full expensing where both are available. Every one of those was decided before the file reached Codex.
- Never claim AIA or full expensing against an item marked `car`. Any such row is a data error and is listed in `gaps.md`, not corrected silently.
- Never apply full expensing or the 50 percent first year allowance to a business that is not a company, or to an item marked `second hand`. Any such row is listed in `gaps.md`.
- Never apply an 18 percent main rate pool rate to expenditure falling after the rate change date, and never apply 14 percent to expenditure before it, without a calculated hybrid shown in `rate_source_note` for a period that straddles the date.
- Never write a typical capital spend, an average claim value or any industry benchmark into any file. No such figure exists for a single independent UK hospitality business and none is to be recorded.
- Never carry a rate, a cap, an opening pool balance or an allowance route forward from a previous year's file without the figure being separately supplied for this year. A prior year's closing balance is used only where it is explicitly supplied as this year's opening balance.
- Use British English, GBP written as `GBP` or the pound sign, and DD Month YYYY dates. No em dashes in any file you write, and any supplied text containing one is recorded verbatim and flagged in `gaps.md`.
- Every quoted item description and supplier name is copied exactly, including its punctuation and capitalisation.
- Every file ends with this line: this is a working document prepared for the owner's own accountant or tax adviser to check before any capital allowances claim is finalised or any return is filed. It applies supplied decisions to the supplied facts and is not a ruling that any allowance shown is correct.

## Return
The absolute path of every file written, the row count of each CSV, the total AIA claimed and whether it stayed within the GBP 1,000,000 cap, the total full expensing and 50 percent first year allowance claimed, the closing balance of the main rate pool and the special rate pool with the rate applied to each, the total Structures and Buildings Allowance claimed for the year, the count of items with no supporting invoice, the count of cars or second hand items incorrectly routed to AIA or full expensing found in the supplied data, and the `gaps.md` item count.