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Capital Allowances: What Every Irish Business Owner Should Know

Buying equipment, vehicles or furniture for your business? Capital allowances allow you to turn those purchases into valuable tax relief over time.

Last updated 21 Apr 2026 | First published 21 Apr 2026

By Gearoid Condon, FCA 4 min read

Limited Companies

When you run a business, you buy things that last more than a year such as laptops, vans, machinery, tools, office furniture. These aren’t day-to-day expenses, so Revenue doesn’t let you deduct the full cost straight away. Instead, you get tax relief through something called capital allowances.

Whether you are a limited company, sole-trader, freelancer or contractor, capital allowances are something you should take advantage of, and they are not as difficult to administer as they sound.

What are Capital Allowances?

Capital allowances are a tax break for long lasting business items, claimed over several years and a reliable way to reduce your tax bill.

Think of capital allowances as a way of spreading the tax relief on big purchases over a few years. Capital allowances are a tax break for buying long‑lasting business items.

You don’t get the full tax deduction in the year you buy the item. Instead, you get a portion of the cost each year for a set number of years. It’s Revenue’s way of recognising that these items wear out over time.

What kind of things qualify?

Most business asset items qualify, including:

Computers and laptops
Machinery and tools
Vans and commercial vehicles
Office desks, chairs, shelving
Security systems
Certain buildings (like factories, hotels, nursing homes)

If it’s used in the business and lasts more than a year, it usually qualifies.

How much can you claim?

For most items, you claim a fixed amount each year over 8 years. You don’t need to do the maths, your accountant will calculate it, but the idea is simple:

You buy something
You get a slice of tax relief each year
After 8 years, you’ve claimed the full amount

Some items have different rules such as:

Energy efficient equipment: You can claim 100% in the first year
Certain buildings: Relief is spread over 25 years
Cars: There’s a limit on how much you can claim

Why do Capital Allowances matter?

Capital Allowances are important as they reduce your tax bill. If you’re a sole trader, they reduce your Income Tax, USC and PRSI. If you’re a limited company, they reduce your Corporation Tax. Even though the relief is spread out, it adds up to real savings.

When can you start claiming?

You can claim once the item is actually being used in the business. If you bought an asset in December but didn’t start using it until January, the claim starts in January.

What if you bought the item with a loan or hire purchase?

You can still claim capital allowances if you purchased an item with a loan or by hire purchase. You claim based on the full purchase price of the item, even if you’re paying it off monthly. The interest part of the finance agreement is claimed separately as a normal business expense.

Repairs vs improvements?

This is where many people get caught out! Repairs are fixing something to get it back to normal. These are claimed immediately as an expense.

Whereas improvements are making something better than before. These go through capital allowances.

What happens when you sell or scrap an asset?

When you get rid of an asset, Revenue checks whether you’ve claimed too much or too little relief. Two things can happen:

Balancing allowance: You get extra relief
Balancing charge: You pay back some relief

This only happens when the asset leaves the business.

Common mistakes to avoid:

Here are some common mistakes people make when it comes to Capital Allowances:

Forgetting to claim allowances on older assets
Not keeping receipts or an asset list
Claiming for items that are partly private use
Overclaiming on cars
Treating improvements as repairs

The good news is that most of these mistakes are easy to avoid once you know what to watch out for. A few simple habits can save you time, stress and potential issues with Revenue.

Review your existing assets regularly

Don’t just focus on new purchases. Many businesses forget to claim allowances on assets they’ve owned for years. A quick review of your asset list can uncover missed claims and additional tax relief.

Keep clear records

Hold onto invoices, receipts and finance agreements for all asset purchases. Maintaining a simple asset register (a list of what you own, when you bought it and how much it cost) makes claiming allowances much easier and keeps you organised if Revenue ever asks questions.

Be mindful of personal use

If an asset is used partly for personal use (for example, a car), you can only claim the business portion. Estimating this fairly and consistently is important to avoid overclaiming.

Understand the rules for cars

Cars have specific limits and restrictions, especially depending on emissions and cost. This is an area where mistakes are common, so it’s worth checking the rules or getting advice before making a claim.

Get advice when needed

If you’re unsure, it’s always better to check. Capital allowances aren’t complicated but getting them right ensures you maximise your tax relief and you stay compliant.

We can help

Your accountant should be able to guide you through capital allowances and ensure you’re claiming everything you’re entitled to. At TaxAssist Accountants, we help directors and business owners take the stress out of tax by keeping records organised, identifying all available reliefs and making sure nothing is missed. If you’re unsure about what you can claim or want to make the most of your tax position, our team is here to help. Contact us today to set up an initial meeting with one of our accountants.

Looking for an accountant?

Contact TaxAssist Accountants for a free, no-obligation consultation to get a fixed fee quote

1800 98 76 09

Or contact us

Last updated 21 Apr 2026 | First published 21 Apr 2026

This article is intended to inform rather than advise and is based on legislation and practice at the time. Taxpayer’s circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this article, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

Gearoid Condon, FCA

Gearoid is a highly experienced Chartered Accountant with 25 years of expertise in business consultancy, specialising in supporting SME business owners. Gearoid has worked with start-ups and with established businesses to improve the way they run, with particular focus on growth, efficiency, and structuring operations. Through his experience Gearoid has a strong understanding of the tax system and business regulations in Ireland.

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