Capital allowances on property: Fixtures, integral features, and claim timing
If you own or run property as part of a business, capital allowances can be one of the easiest ways to improve cash flow in the year you spend the money. The catch is that property claims are rarely straightforward. You have to know what counts as plant and machinery, what is treated as a fixture, what falls into the “integral features” bucket, and when you are allowed to claim.
Get it right and you could bring forward tax relief worth thousands. Miss the key steps (especially on a purchase) and you can end up with a claim blocked, even if the building is full of qualifying assets.
This guide walks you through what you need to know, in plain English, with the practical steps you can actually use.
If you want support from a property specialist, take a look at our Property Tax Accountants service.
What are capital allowances in a property context?
Capital allowances are tax relief on qualifying capital expenditure. In property, that usually means spending on plant and machinery within a building, rather than the building structure itself.
Think of it like this:
- The building “shell” is normally not plant and machinery.
- The functional stuff inside the building often is.
- Some items are fixtures (attached to the building) which matters a lot when ownership changes.
- Some items are “integral features” which fall into a separate pool for relief.
Capital allowances most commonly come up in commercial property, serviced accommodation, and trading businesses operating from premises.
If you are a landlord, it is also worth understanding where capital allowances sit alongside repairs and improvements. This article helps you draw the line: Deductible expenses for landlords: repairs vs improvements and apportionment rules.
Fixtures vs integral features: what is the difference?
Fixtures
A fixture is plant and machinery that becomes fixed to a building or structure. Once something becomes a fixture, special rules apply when the property is bought or sold. This is where many claims go wrong.
Common examples of fixtures include things like fitted lighting, built-in cooling systems, lifts, and sanitary systems (where they qualify as plant rather than part of the structure). HMRC’s manuals and the legislation include specific processes for agreeing fixture values between buyer and seller.
Integral features
Integral features are a defined list of building systems that are treated as plant and machinery, but they sit in a special category. HMRC lists integral features such as: space and water heating systems, air-conditioning and air cooling, electrical systems, lighting systems, lifts, escalators, moving walkways, and hot and cold water systems.
They are important because they are usually allocated to the special rate pool (with different relief mechanics than “main pool” assets), unless you can claim 100 percent relief via an allowance (more on that below).
What you can usually claim on in a commercial building
Every property is different, but these are the common categories that often qualify:
- Electrical systems, including distribution boards and wiring (integral feature).
- Lighting systems (integral feature).
- Heating, ventilation, air conditioning (integral feature).
- Lifts and access systems (integral feature).
- Fire alarm, CCTV, and security systems (often plant and machinery depending on installation and purpose)
- Data cabling and network infrastructure in many trading settings
- Certain fitted kitchens and sanitaryware in commercial contexts (fact dependent)
- Loose plant and machinery you buy for the premises (equipment, tools, certain furniture)
Where you need to be careful is anything that looks like “part of the building”. Floors, walls, roofs, and most structural works do not qualify as plant and machinery.
The big property trap: buying a building with fixtures inside
When you buy a property, you are not automatically entitled to claim allowances on all the fixtures already inside it.
For certain fixture expenditure, you can be restricted to nil unless the seller has done the right steps and you have the right documentation. The law includes requirements around pooling and “fixed value” for fixtures.
Section 198 election: the paperwork that often makes or breaks the claim
A common way to agree the value of fixtures transferred is a Section 198 election (Capital Allowances Act 2001). HMRC explains the election process in its Capital Allowances Manual.
In plain terms, the election is a written agreement (submitted to HMRC) stating how much of the purchase price relates to qualifying fixtures. If you do not handle it properly, you can end up with:
- the seller facing a clawback on their side, and
- you getting no allowances on the fixtures you thought you bought.
This is why claim timing matters: you need to think about capital allowances before exchange and completion, not 6 months later when you are doing the tax return.
If you are planning a purchase, it is a good time to speak to a specialist. Our property team can help you structure this properly via Commercial Property Management Accounting and Property Tax Accountants.
Claim timing: when you claim matters almost as much as what you claim
1) The “when incurred” rule
Capital allowances are generally claimed in the period the expenditure is incurred. That sounds obvious, but in property it can get messy because you might have:
- staged refurbishments,
- retention payments,
- long projects that straddle year-ends,
- and completion accounts on acquisitions.
Your job is to make sure costs are captured in the correct period, backed by proper invoices and completion statements.
If your bookkeeping is not tidy, you will struggle to evidence claim timing. We often see this when landlords and property businesses run on spreadsheets for too long. If that is you, start with Xero Bookkeeping Services and our guide to setting it up properly: Xero bookkeeping basics.
2) Annual Investment Allowance: often the quickest win
For many property-related businesses, the Annual Investment Allowance (AIA) is the simplest route to 100 percent relief, in-year, up to the limit.
The UK Government legislated to keep the AIA limit at £1,000,000 for qualifying plant and machinery expenditure from 1 April 2023.
That limit can cover a lot of refurbishment projects, especially where your spend is heavy on electrical, heating, and building systems.
3) Full expensing and first-year allowances: companies need to watch the dates
If you operate through a limited company, you may also hear about “full expensing”. Government guidance introduced full expensing for main rate assets and a 50 percent first-year allowance for special rate expenditure for a defined period (originally up to 31 March 2026).
Capital allowance rules can change, and recent government publications also refer to permanent full expensing and related changes.
So the practical takeaway is: if you are investing heavily, you should review your planned spend against the dates and your accounting period, not just “this tax year”.
4) Writing down allowances: relief over time, not all at once
If you cannot claim 100 percent upfront (or you choose not to), you typically claim writing down allowances (WDA) over time, based on the pool your asset sits in.
There have been announcements about reducing the main rate WDA to 14 percent from 1 April 2026 for corporation tax and 6 April 2026 for income tax.
That makes claim timing and the choice of relief route more important, especially if you are forecasting taxable profits and cash flow.
Practical examples: what claim timing looks like in real life
Example 1: refurbishing a commercial unit
You buy a commercial unit and spend £180,000 refurbishing it:
- £70,000 on electrical and lighting
- £45,000 on air conditioning
- £35,000 on fire and security systems
- £30,000 on non-qualifying structural works
If the qualifying spend is correctly identified and supported, you may be able to claim significant in-year relief using AIA (up to the relevant limit), instead of drip-feeding relief over years. The difference can be a real cash flow boost.
Example 2: buying a property with existing fixtures
You buy a building that has a lift, HVAC, full lighting system, and built-in electrical infrastructure. You assume you will claim allowances after completion.
If you do not address fixtures correctly in the purchase process, you can lose the claim. This is why you want tax input before you exchange contracts, not after.
What records you should keep to support the claim
HMRC rarely “loves” property claims unless the paperwork is strong. Keep:
- completion statement and sale contract
- a breakdown of asset values, ideally supported by a specialist report
- invoices for refurbishment works
- evidence of what relates to qualifying plant and what is structural
- Section 198 election documents where relevant
- clear bookkeeping records showing dates and amounts
If you are preparing year-end packs for leaseholders or property clients, your underlying records also need to reconcile cleanly.
A quick note for landlords: capital allowances are not a “standard” rental claim
For most residential landlords, capital allowances are not something you claim on the property itself in the way commercial owners do. You are usually looking at allowable expenses and capital improvements instead.
There are some limited and specialist situations (for example, historical furnished holiday letting treatment, with transitional points), but the general rule is: do not assume. If you have a complex property setup, ask before you claim.
FAQs: capital allowances on property
Can you claim capital allowances on the building itself?
Usually, no. The building structure is not plant and machinery. Claims normally relate to qualifying assets inside the building, such as systems and equipment, including integral features.
What are integral features in simple terms?
They are defined building systems like electrical systems, lighting, heating, air conditioning, lifts, escalators, and water systems. They are specifically listed by HMRC and treated as plant and machinery for capital allowance purposes.
If you buy a commercial property, can you claim on the fixtures that are already there?
Sometimes, but not automatically. Fixtures have special rules when ownership changes, and your entitlement can depend on whether the seller pooled the expenditure and whether you agree a fixed value, commonly through a Section 198 election.
When should you think about capital allowances in a property purchase?
Before you exchange contracts. If you leave it until after completion, you can lose leverage on the allocation of value to fixtures, and you increase the risk of missing required documentation.
What is the Annual Investment Allowance and why does it matter for property projects?
AIA gives 100 percent relief in the year you incur qualifying expenditure, up to the limit. The UK Government legislated to keep the AIA limit at £1,000,000 for qualifying spend from 1 April 2023.
Are the rules changing in 2026?
There have been announcements affecting capital allowances, including changes to writing down allowances from April 2026 and new first-year allowance measures. If you are planning significant spend, it is worth reviewing the timing against your accounting period.
How FHP Accounting helps you claim correctly and on time
With capital allowances, most of the value is won or lost in the detail: what you include, how you evidence it, and when you claim it. If you are buying, refurbishing, or reorganising property assets, you will usually benefit from having your bookkeeping, tax, and reporting lined up from the start.
Ready to take the hassle out of your finances? Speak to FHP Accounting today — your trusted accountants nottingham for clear advice and fast, friendly support. Whether you need reliable accountant payroll services, specialist help from property tax accountants, seamless xero bookkeeping services, or a dedicated accountant for landlords, our team is here to help you stay compliant, save money, and grow with confidence. Get in touch now to book your consultation.
