Renters' Rights Act 2025, Phase 1 commencement
Transition readiness pack
England

Commercial Property Tax

Capital Allowances Commercial Property UK — Plant and Machinery, AIA, Fixtures Election, and SBA

Covers qualifying plant and machinery in commercial buildings (integral features at 6%; other P&M at 18%), the Annual Investment Allowance (£1m; permanent from April 2023), the s.198 fixtures election pooling requirement (2-year deadline on purchase), the 3% Structures and Buildings Allowance, and the abolition of FHL capital allowances from 6 April 2025.

20 min readUpdated 8 June 2026Last reviewed: 17 May 2026capital-allowancesplant-machineryaiafixtures

Qualifying Plant and Machinery in Commercial Property

Qualifying plant and machinery in commercial buildings (CAA 2001 Part 2): HVAC systems; electrical systems (wiring; distribution; lighting); cold water systems; lifts; fire alarm and suppression systems; security/CCTV; data cabling; fitted commercial kitchens. Integral features (CAA 2001 s.33A): electrical systems; cold water; heating; ventilation; lifts — special rate pool at 6% per year. Building structure (walls; floors; ceilings; roof; windows) does not qualify. HMRC CA21140 provides detailed guidance on the plant/structure distinction.

Annual Investment Allowance — £1 Million

AIA = 100% first-year deduction on qualifying plant and machinery up to £1m per year (permanent from 1 April 2023/6 April 2023). Commercial landlords with a UK property business qualify. CIHCs (close investment holding companies) excluded. Expenditure above the AIA: main pool at 18% reducing balance; integral features at 6% special rate pool. Short-life asset elections available for assets with under 8-year expected life.

Fixtures — The s.198 Election and Pooling Requirement

Pooling requirement (Finance Act 2012): before a buyer can claim on acquired fixtures, the seller must have pooled them. s.198 election: joint buyer/seller election within 2 years of completion, fixing the apportioned value of fixtures (between £1 and original cost). Missing the 2-year deadline permanently disqualifies the buyer from claiming on those fixtures. Every commercial property acquisition should include a capital allowances survey and s.198 election at the conveyancing stage.

Structures and Buildings Allowance (3%) and FHL Abolition

SBA: 3% straight-line deduction on qualifying construction, renovation, or conversion of non-residential buildings; available from October 2018; 33.3-year deduction period; does not cover residential property or plant and machinery. FHL allowances abolished from 6 April 2025: FHL properties no longer qualify for AIA or PMAs on new furniture and fittings; ongoing pools continue for pre-abolition assets. Significant loss for FHL investors who relied on the AIA for 100% first-year deductions.

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