Definitions for "Capital Allowances"
Tax allowances which enable the owner of an asset to take into account depreciation on the asset against taxable income.
You can sometimes claim capital allowances when you buy long-term assets, such as machines, to use in your business. You claim part of the cost each year against your profits, before your tax is worked out.
When an asset is used for business purposes, the purchase cost is not normally allowable as an expense. This is because the asset still has a value after it has been used. However, the value of the asset will decrease over time. An allowance to reflect this depreciation can be claimed instead. This is known as a Capital Allowance.