How to Claim AIA Capital Allowances on Property Plant

Once you have established that your spend genuinely qualifies, claiming the Annual Investment Allowance is a mechanical exercise: you put the right number in the right box of the right return, in the right period, and you keep the paperwork that backs it up. This guide is about that process. It does not re-argue who can claim and on what, because for a landlord that eligibility question turns almost entirely on whether the plant sits inside a dwelling-house, and that is the load-bearing point our companion pages already cover in depth. Here we assume the spend qualifies and walk through how to actually claim it.

If you are not yet sure your spend qualifies, start with our guide on whether landlords can claim AIA and our capital allowances on property overview. This page picks up after that.

Before you claim: confirm the spend qualifies

The single most common AIA error a landlord makes has nothing to do with the claim mechanics. It is claiming on plant that was never eligible in the first place. CAA 2001 section 35 disqualifies expenditure on plant or machinery provided for use in a dwelling-house within a property business ^[1]. That bar catches the very items most landlords assume they can claim: the boiler, the fitted kitchen, the bathroom, the carpets and the white goods inside a let flat or house.

So before you reach the return, satisfy yourself that the spend is in qualifying space. In practice that means one of three things: plant in a commercial or mixed-use property, plant in the common parts of a block or HMO that are not themselves a dwelling-house (the communal boiler, the lift, hallway lighting), or qualifying integral features in those non-dwelling areas. If the asset is a fixture you have just acquired with a building, an election under CAA 2001 section 198 may be needed to fix the value passing to you, and there is a strict two-year time limit on that election under CAA 2001 section 201 ^[2]. The detailed eligibility test is not re-run here; if you have any doubt, settle it using the eligibility guides linked above before you build the claim.

How to claim AIA: the six steps

The claim breaks down into six steps. The first two decide whether and when you can claim; the last four are the mechanics of getting it onto the return correctly.

1. Confirm the plant qualifies. Check the asset is in non-dwelling space and is not a general exclusion such as a car.
2. Identify the period it falls in. Work out the date the expenditure is treated as incurred, because that dictates the chargeable period.
3. Allocate it against your in-year AIA limit. Set the qualifying spend against the £1,000,000 cap, time-apportioned and shared where the rules require.
4. Enter it in the right return box. Self-assessment property pages for individuals and partnerships; the CT600 and its computation for companies.
5. Pool the balance. Anything above the cap, or not fully expensed, goes to the main pool (14%) or special-rate pool (6%) for writing-down allowances.
6. Keep the evidence. Invoices, contracts, completion statements and a fixed-asset register, retained for the statutory period.

Step 2: when is the expenditure incurred?

The period in which you claim is fixed by the date the expenditure is treated as incurred, not the date you happen to pay. The general rule is that expenditure is incurred on the date the obligation to pay becomes unconditional. For most plant that is delivery or completion. There is one important refinement: if the date on which the payment is required to be made falls more than four months after the obligation became unconditional, the expenditure is treated as incurred on that later due date instead.

This matters most around a year end. If you sign a contract and take delivery of qualifying plant in March but the invoice is not payable until later, the claim still belongs in the period that captures the unconditional obligation, provided the four-month rule does not push it out. Getting the period right is what lets you bring relief forward where it is genuinely available, and it is also what stops HMRC moving the claim into a different year on enquiry.

Step 3: working the £1,000,000 cap in-year

AIA gives a 100% deduction for qualifying plant and machinery, capped at £1,000,000 of expenditure in a chargeable period (CAA 2001 section 51A) ^[3]. The cap was set at £1,000,000 from January 2019 and made permanent from 1 April 2023 by Finance (No. 2) Act 2023, which substituted the £1,000,000 maximum into section 51A(5) ^[4]. For the overwhelming majority of property businesses, annual qualifying spend sits well inside the cap, so the practical job is simply totalling the qualifying expenditure and claiming it.

Two adjustments catch people out. First, the cap is time-apportioned: a chargeable period of less than twelve months gets a proportionate limit, so a nine-month period gives £750,000. Second, the £1,000,000 is shared, not multiplied: companies in the same group, and businesses under common control occupying shared premises, get one limit between them rather than one each. Where a single year carries several large qualifying assets, the order in which you allocate the cap and the writing-down pools affects the relief profile, and that allocation strategy is covered in our AIA £1m cap allocation and association rules guide.

Step 4: which return box, and where

How you claim depends on the entity, but the principle is the same: the AIA reduces taxable profit through the capital allowances figures, not as an ordinary running cost.

You are	Where the AIA goes	What feeds it
Individual or partnership with a UK property business	Capital allowances box on the SA105 UK property pages of the self-assessment return	Your capital allowances computation (kept, not filed)
Individual or partnership with a trade (for example property development)	Capital allowances box on the self-employment pages (SA103)	Trade capital allowances computation
Company (limited company landlord or developer)	Capital allowances summary within the CT600	The corporation tax computation accompanying the CT600

For an individual or partnership, the figure entered is the AIA you are claiming for the tax year; the working that builds it up is retained rather than filed. For a company, the allowance is calculated in the tax computation, flows into the property-business or trading profit, and is shown in the capital allowances part of the return. The company must own the plant in the accounting period and have incurred the qualifying expenditure in it. A property accountant typically prepares the computation that sits behind these boxes so the figures reconcile to the fixed-asset register.

Step 5: pooling the balance and the writing-down allowances

AIA is not the only route, and any qualifying spend above the cap (or that you choose not to fully expense) does not disappear. It goes into a capital allowances pool and attracts a writing-down allowance each year on a reducing-balance basis. The main pool rate fell to 14% under Finance Act 2026 section 28, which substituted 14% into CAA 2001 section 56(1) ^[5]. Integral features and other special-rate plant stay in the special-rate pool at 6%. Our guide on writing-down allowance rates sets out the pool mechanics.

For companies there is also full expensing, a 100% first-year allowance with no upper cap, but it is restricted to companies and to new and unused main-rate plant (CAA 2001 section 45S) ^[6]. And from 1 January 2026 there is a new 40% first-year allowance on new and unused main-rate plant where full expensing does not apply, introduced by Finance Act 2026 section 29 through new CAA 2001 section 45U ^[7]. The next section sets these routes side by side so you can see which box your spend belongs in.

AIA, full expensing and the 40% FYA compared

When AIA is not the obvious answer (because the spend exceeds the cap, or because a company wants an uncapped 100% deduction), it helps to see the alternatives together. The super-deduction has gone; it applied only to expenditure from 1 April 2021 to 31 March 2023 and is no longer a live route. The current options are these.

Allowance	Rate	Who can use it	New or used	Key statute
Annual Investment Allowance	100% up to £1,000,000 a year	Individuals, partnerships, companies	New or used	CAA 2001 s.51A
Full expensing	100%, no cap	Companies only	New and unused, main rate	CAA 2001 s.45S
40% first-year allowance	40%	Any business where full expensing does not apply	New and unused, main rate, on or after 1 Jan 2026	CAA 2001 s.45U (FA 2026 s.29)
Main-pool writing-down allowance	14% reducing balance	All	n/a	CAA 2001 s.56 (FA 2026 s.28)
Special-rate pool writing-down allowance	6% reducing balance	All	n/a	CAA 2001 s.104D / s.33A

Two points to carry away. Full expensing is for companies only, so an individual or partnership cannot use it; the 40% first-year allowance is the practical uncapped-spend route for unincorporated landlords on new main-rate plant. And the special rate is unchanged at 6%; only the main-pool rate moved, down to 14%. If you are weighing the company route for the full-expensing advantage, our buy-to-let limited company guide sets the wider trade-offs out.

Cars, vans and the AIA exclusion

Cars are a general exclusion from AIA under CAA 2001 section 38B, so you cannot claim AIA on a car used in the property business however the business is run ^[8]. They are also outside full expensing and the 40% first-year allowance. Vans, lorries and motorcycles are not cars for this purpose and can be claimed through AIA in the normal way. A car instead goes into a pool by emissions: a low-emission car at or below 50g of CO2 per kilometre goes to the main pool at 14%, and a car above that threshold to the special-rate pool at 6%. There is a separate 100% first-year allowance for a brand-new, unused zero-emission car under CAA 2001 section 45D, but only for genuine 0g/km vehicles.

Step 6: the records HMRC expects

A clean claim is one you can evidence. For each asset, keep the purchase invoice, the contract or order, completion or delivery documentation that fixes the date incurred, and a fixed-asset register entry recording the cost, the description, the date and which allowance or pool the asset went into. For a property business, your records should also make clear that the plant sits in qualifying non-dwelling space, because that is the point an enquiry is most likely to probe.

Retain the records for the statutory period: for self-assessment, generally until at least the fifth anniversary of the 31 January filing deadline for the relevant year; for companies, at least six years from the end of the accounting period. Note that Making Tax Digital for Income Tax is now phasing in for landlords and sole traders, from 6 April 2026 for those with qualifying income above £50,000, from April 2027 above £30,000 and from April 2028 above £20,000, so digital record-keeping for your property business is increasingly the default rather than a choice.

What a residential landlord claims instead of AIA

Because section 35 blocks AIA on plant inside a let dwelling, residential landlords often need the alternative route rather than the claim process above. The replacement of domestic items relief under ITTOIA 2005 section 311A gives a revenue deduction for the cost of replacing a domestic item (furniture, furnishings, household appliances, kitchenware) in a let dwelling-house with a substantially similar item ^[9]. It is not a capital allowance, the legislation specifically rules out a CAA 2001 claim on the same expenditure, and there is no relief for the first purchase or initial fit-out, only for genuine replacements. A like-for-like boiler swap or a replacement fridge in a let flat is relieved this way, not through AIA. For the full picture of revenue versus capital on a let property, see our landlord tax deductions guide.

A note on the April 2027 rates

From 6 April 2027, property income in England, Wales and Northern Ireland is taxed at separate rates of 22% basic, 42% higher and 47% additional, enacted by Finance Act 2026 (Royal Assent 18 March 2026; Scotland is outside this change). The Section 24 finance-cost reducer rises to 22% in step, so no new basic-rate wedge opens. The only relevance to a capital allowances claim is that allowances reduce the taxable property profit before those rates apply, so a correctly made AIA or writing-down claim is worth marginally more once the separate rates are in force.

Common claim-process mistakes

The errors we see most are procedural rather than conceptual. Claiming AIA on plant inside a let dwelling is the big one, barred by section 35 and best handled through the section 311A replacement relief instead. Close behind: putting the claim in the wrong period by treating the payment date as the date incurred; assuming full expensing is open to individuals when it is companies only; forgetting to share the £1,000,000 cap across grouped or commonly-controlled businesses; and claiming on an asset before the property is available to let so the plant is not yet in use for the qualifying activity. Each of these is avoidable with a computation that ties to a properly kept fixed-asset register.

Final thoughts

AIA is simple to claim once eligibility is settled: confirm the plant qualifies, fix the period, allocate against the £1,000,000 cap, enter it in the property pages or the CT600, pool the balance and keep the evidence. The value sits in getting the period and the records right, and in not wasting the relief on in-dwelling plant that section 35 was always going to block. If you want the eligibility question answered first, or you are deciding between AIA, full expensing and the 40% first-year allowance on a large spend, speak to a specialist property accountant before you file.

Sources

1. legislation.gov.uk: Capital Allowances Act 2001 s.35 - plant or machinery for use in a dwelling-house
2. legislation.gov.uk: Capital Allowances Act 2001 s.201 - fixtures election time limit
3. legislation.gov.uk: Capital Allowances Act 2001 s.51A - entitlement to annual investment allowance
4. gov.uk: Claim capital allowances: Annual investment allowance - GOV.UK
5. legislation.gov.uk: Finance Act 2026 s.28 - main-pool writing-down allowance reduced to 14%
6. legislation.gov.uk: Capital Allowances Act 2001 s.45S - full expensing (companies)
7. legislation.gov.uk: Finance Act 2026 s.29 - 40% first-year allowance (new s.45U)
8. legislation.gov.uk: Capital Allowances Act 2001 s.38B - general exclusions from AIA (cars)
9. legislation.gov.uk: ITTOIA 2005 s.311A - replacement of domestic items relief