Capital Allowances for Hospitality: Cafes, QSR and Leisure Fit-Outs

Cafes, coffee shops, quick-service restaurants, juice and dessert bars, and leisure units such as gyms, soft-play centres and entertainment venues share a tax feature that operators rarely exploit fully. A large slice of what it costs to fit one out is not building, it is plant. Commercial kitchens, extraction, refrigeration, the servery and counter fit-out, loose seating, point-of-sale and audio-visual systems and the electrical and water installations behind them are all capital allowances territory. Typically 25% to 40% of a hospitality fit-out qualifies as plant and machinery, one of the richer ranges in commercial property.

This page is the applied, sector version for cafes, QSR and leisure. It is not the statute walk-through. For how integral features and the fixtures rules work in detail, the integral features mechanics page and the full capital allowances guide own the derivation. Here the focus is what a hospitality claim is worth, the one nuance that sets the sector apart, and how to secure the relief on a fit-out you refresh often.

Why cafes, QSR and leisure fit-outs hold a rich claim

A hospitality unit is a trading machine. Unlike an office or a warehouse, where a lot of the spend is bare structure, a cafe or quick-service site turns a shell into a kitchen, a serving counter, a cold chain and a customer space, and almost all of that is qualifying plant. The building itself, the walls, floor slab and roof, gives only the Structures and Buildings Allowance at 3% a year. The value is in the fixtures, and in hospitality the fixtures dominate the spend.

Two things push hospitality toward the top of the range. First, the density of services: a small footprint packs in extraction, refrigeration, hot and cold water, three-phase power and ventilation that a comparable retail unit would not have. Second, the fit-out is designed to be seen, so the counter, servery, menu boards and lighting are heavily specified. That combination is why 25% to 40% is normal here, against 15% to 25% for a plain office.

The plant and integral features that dominate a hospitality claim

Every sector has its own signature list of qualifying items. For cafes, QSR, bars and leisure the claim is built from these, and it is worth knowing which pool each tends to fall into because that governs how fast the relief arrives.

• Commercial kitchens and extraction. Cooking lines, canopies, extract ductwork and fans, gas and power installations, stainless fabrication and wash-up. A mix of loose main pool plant and special rate integral features.
• Refrigeration and cold rooms. Walk-in cold rooms, under-counter and display refrigeration, ice machines and the associated cooling and drainage. High-value and central to a food or drink trade.
• Bar and servery fit-out. Counters, servery lines, back-bar units, coffee stations, dispense and the loose trade fixtures that sit on them.
• Seating, furniture and decorative scheme. Loose tables, chairs, booth seating and the ambience finishes installed to create the trading atmosphere.
• Point-of-sale and audio-visual. Tills and payment terminals, kitchen display and order screens, menu boards, sound and AV systems and the cabling behind them.
• Franchise fit-out packages. The turnkey branded fit-out a franchisor specifies, which bundles most of the above under one shopfitter invoice and needs breaking back down.

Some of these, the extract ventilation, the electrical installation, the cold-water and heating systems and comfort cooling, are integral features in the 6% special rate pool. Others, the loose catering kit, furniture, tills and signage, are main pool plant. The split is not cosmetic. It decides how much relief is available in year one and how much of a residue is left to write down, which is where the sector-specific planning below comes in.

What a hospitality claim is worth

Take a typical example. An operator spends £250,000 fitting out a new quick-service cafe unit: kitchen line and extraction, a walk-in cold room and display fridges, a branded servery and counter, seating for forty covers, tills, screens and signage. On a survey, around 35% of that, roughly £87,500, is identified as qualifying plant and integral features. The rest is structure, professional fees on non-qualifying works and items that fall outside the rules.

For a company, the £87,500 is relieved fast. Main rate plant qualifies for full expensing at 100% or the Annual Investment Allowance, and the special rate integral features get the 50% first-year allowance or sit in the AIA up to the £1,000,000 cap. At the 25% corporation tax rate, £87,500 of relief is worth around £21,875 in tax. Because the AIA covers £1,000,000 a year, a single £250,000 fit-out is usually relieved in full in year one regardless of the pool split.

The short-life asset election: the move that fits the refit cycle

Here is what sets hospitality apart from every other sector on this site. These businesses do not keep a fit-out for its full economic life. Brands refresh, footfall shifts, franchisors mandate a new look, and a cafe or QSR unit is routinely stripped out and refitted every four or five years. That cadence is the reason the short-life asset election under sections 85 and 86 CAA 2001 deserves a place in the plan.

Normally, loose main pool plant that is not fully relieved in year one goes into the general pool and is written down at 14% a year (reduced from 18% from April 2026). The problem is that the pool does not know when an asset has physically gone. Rip out a counter, a set of fridges or a bank of screens on a refit, and their unrelieved value keeps being written down slowly inside the general pool for years afterward, long after the kit is in a skip. The relief crawls out at 14% when the asset no longer exists.

A short-life asset election breaks that. You elect, in the return for the period the expenditure is incurred, to keep the item in its own single-asset pool. When you dispose of or scrap it, provided that happens within eight years of the end of that period, you get a balancing allowance for whatever is left unrelieved at that moment. A four or five year refresh sits comfortably inside the eight-year window, so the residue is written off on refit in one go rather than dribbling on.

Where does this actually earn its keep? Not on a single small fit-out that the AIA or full expensing already relieves in full, because there is no residue to crystallise. It matters when the loose plant is not fully relieved in year one: a multi-site operator whose combined annual fit-out spend runs above the £1,000,000 AIA cap, an operator who has already used the AIA on other capital spend, or a business buying second-hand kit that does not qualify for full expensing or the new 40% first-year allowance. In those cases the loose plant lands in the general pool, and short-life electing it means the next refresh releases the balance instead of stranding it. Note that special rate integral features cannot be short-life assets, so this is a main pool plant technique, aimed squarely at the moveable kit that a hospitality refit throws out.

Franchise fit-out packages and who holds the claim

Franchised hospitality adds a wrinkle. A franchisor typically specifies a turnkey fit-out, delivered by an approved shopfitter under a single package price. That price bundles the branded servery, the kitchen line, refrigeration, seating, signage and menu boards, and it arrives as one invoice with little detail. Left as a lump sum it is impossible to claim properly, because HMRC allowances follow the qualifying items inside the package, not the headline figure.

The fix is a cost analysis that breaks the package back into qualifying plant, integral features and genuine non-qualifying structure or fit-out. Most of a branded hospitality package is qualifying, but the split has to be evidenced. The other question franchising raises is entitlement: where the unit is leased, the franchisee usually incurs and owns the fit-out expenditure and holds the claim, but the lease terms and any landlord contribution need checking so the claim sits with the party that actually bore the cost.

Buying or fitting out versus already owning the unit

How you came by the site changes the mechanics. If you are carrying out a fresh fit-out, the spend is new qualifying expenditure and the AIA, full expensing and first-year allowances apply directly, which is the simplest and most valuable position. If you are buying a hospitality unit as a going concern with fixtures already in place, the section 198 election and the fixtures pooling requirement come into play: the value passing on the existing fixtures should be fixed by a joint election, and if the seller could have pooled them but did not, and no election is made, the right to claim on those fixtures can be lost entirely. That point belongs in the conveyancing, not after completion.

If you already own and trade from the unit and have never had a claim reviewed, you are very likely leaving relief on the table. There is no time limit on a first claim for fixtures you still own, so an older fit-out can be surveyed and pooled now, with relief carried forward. For the buying-a-commercial-property angle in full, including the election trap, see the embedded capital allowances guide, which is the hub for every sector page including this one.

How a specialist survey works and what it costs

A hospitality capital allowances claim is a surveying job, not a bookkeeping one. The specialist visits the site, measures and photographs the qualifying plant, values the fit-out or purchase cost on a just and reasonable apportionment, decides which items belong in the main pool and which are special rate integral features, and identifies the loose plant that should go into short-life asset pools given the refresh cycle. They then prepare the analysis and the schedule HMRC expects to see behind the return.

These firms almost always work on a no-win, no-fee or contingent basis, so the review costs nothing up front and a fee applies only when a claim is agreed. The important thing is who you are routed to. This should be a specialist surveyor-led fixtures firm, not a general accountant treating the fit-out as a single lump, and it is nothing to do with fee-protection or tax-investigation insurance, which is a separate regulated product and not part of a capital allowances claim. To sense-check a figure before you enquire, the capital allowances calculator gives an indicative pool from a fit-out cost, and it is worth comparing the treatment on the hotels and pubs and restaurants pages where a different plant mix and the Wetherspoon case law dominate.

The rules referenced here sit in the Capital Allowances Act 2001, in particular the short-life asset provisions at section 85 and section 86, the integral features definition at section 33A and the fixtures elections at section 198. HMRC sets out its approach to short-life assets in the Capital Allowances Manual at CA23680 and to fixtures elections from CA26470, and the general reliefs are summarised on the gov.uk capital allowances pages.