Why capital allowances matter in the CT600 workflow

Capital allowances can materially change a company's Corporation Tax liability. They are also one of the areas where a simple accounts-to-tax conversion can go wrong: the accounts may show depreciation, but Corporation Tax relief is based on capital allowance rules instead.

GOV.UK describes capital allowances as tax relief that lets businesses deduct some or all of the value of qualifying items from profits before tax. For CT600 software, the important job is to turn asset purchases, disposals, and pool movements into a clear computation that the reviewer can trust.

Start with qualifying expenditure

The first review question is whether the item is plant or machinery, a business vehicle, a fixture, a car, or something else. HMRC guidance says capital allowances can be claimed on items kept for use in the business, but different categories have different rules.

The workflow should capture what was bought, when it was bought, whether it was new or used, whether it is a car, whether there is any private use, and whether the company has disposed of the asset.

Annual Investment Allowance

The Annual Investment Allowance, or AIA, can allow a business to deduct the full value of qualifying expenditure from profits before tax, up to the available limit. HMRC says AIA can be claimed on most plant and machinery, but not everything qualifies.

A software workflow should not simply apply AIA to every fixed-asset addition. It should distinguish cars, special-rate items, assets with private use, connected transactions, and periods where the AIA limit or accounting period length needs review.

Full expensing and first-year allowances

HMRC guidance says only companies can claim full expensing and the 50% first-year allowance. It also says the expenditure must meet conditions including being bought from 1 April 2023, new and unused, and not a car.

For company directors and practices, the key review point is eligibility. Full expensing can be valuable, but the return file should show why the asset qualified and why another allowance was not more appropriate.

Writing down allowances and pools

Where full relief is not claimed in the year of purchase, writing down allowances may apply. HMRC explains that writing down allowances deduct a percentage of the value of items from profits each year.

This is where continuity matters. The brought-forward pool, additions, disposals, allowance claimed, and carried-forward pool need to agree year after year. A weak pool schedule can turn a small CT600 job into a reconstruction exercise.

Disposals and balancing adjustments

When a company sells or disposes of an asset on which capital allowances were claimed, the disposal value needs to be included in the capital allowances calculation for that accounting period. Depending on the pool and asset history, that may create a balancing charge or affect the pool carried forward.

The review file should show proceeds, disposal date, asset identity, original treatment, and how the disposal was reflected in the computation. This is especially important when assets were financed, part-exchanged, scrapped, or sold to connected parties.

Practice checklist before filing

Reconcile fixed-asset additions to invoices, finance agreements, and the accounts.
Separate depreciation from tax relief in the computation.
Identify cars, special-rate assets, fixtures, integral features, and main-rate plant.
Check AIA availability and whether the accounting period affects the limit.
Review full expensing or first-year allowance eligibility for company expenditure.
Bring forward pool balances and carried-forward allowances correctly.
Record disposals, proceeds, and balancing adjustments.
Keep notes for judgment calls and client approval.

Common mistakes

The first mistake is claiming relief on the accounting depreciation figure instead of calculating capital allowances. The second is claiming the most generous-looking allowance without checking exclusions. The third is failing to maintain pool continuity across periods.

Another common issue is leaving the evidence outside the return file. If an accountant or director later needs to explain a claim, the computation should point back to the source figures and review decision.

How Robocount helps

Robocount is designed around the whole CT600 package: computation, return, supplementary pages where needed, review trail, and filing readiness. Capital allowances belong in that computation-led workflow.

Capital allowance review points alongside the Corporation Tax computation.
Support for AIA, full expensing, writing down allowances, disposals, and pool continuity workflows.
Clear bridge from trial balance and fixed-asset detail to CT600 tax figures.
Review evidence for practices preparing owner-managed company returns.
Structured data suitable for API and AI-assisted CT600 preparation.

FAQ

Can a company claim depreciation in its CT600?

Depreciation in the accounts is usually adjusted in the Corporation Tax computation. Tax relief is normally calculated through capital allowances rather than the accounts depreciation charge.

Are AIA and full expensing the same?

No. They are different capital allowance routes with different eligibility conditions. A company should review the asset type, date, use, and allowance rules before choosing the treatment.

Does capital allowance software need asset-level evidence?

It should keep enough detail to support the computation: what was bought, when, cost, asset category, allowance claimed, disposals, and reviewer notes for judgment areas.

Official references

This guide is general product and filing workflow information, not tax advice. Check current HMRC guidance and the company's facts before filing.

Capital allowances in CT600 software: what accountants and directors need to review.