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Capital allowances, Patent Box and creative-industry reliefs

Tax reliefs that cut your tax bill when you buy equipment, earn profits from patents, or make films, TV, games or shows. They do not bring in new money, but they leave more of your own cash in the business.

L0 · Free or nearly freeNot FCA regulatedLast checked: 7 October 2026
Cost band
L0
Free or nearly free
Speed
Months
Amount
Varies
Term
Claimed each year through your tax return
Ownership
No shares given up
Security
  • No security

How it works

These reliefs reduce the tax you pay, so you keep more cash. Most only help if you make a taxable profit, and the saving arrives when your tax return is dealt with.

  • Annual Investment Allowance: deduct the full cost of most plant and machinery, up to £1 million a year, from your profits. Open to sole traders, partnerships made up of individuals, and companies. Cars do not qualify.
  • Full expensing: companies paying Corporation Tax can deduct the whole cost of new, unused main-rate plant and machinery, with no upper limit. Cars and assets bought to lease out do not qualify.
  • 40% first-year allowance: from 1 January 2026, deduct 40% of the cost of new, unused main-rate plant and machinery in the first year, then claim the rest over later years. Unlike full expensing, unincorporated businesses and assets bought for leasing can use it. Cars do not qualify.
  • Patent Box: companies can pay Corporation Tax at an effective 10% on profits from patented inventions they own or exclusively license and have helped develop. You must elect within two years of the end of the accounting period.
  • Creative-industry reliefs: companies making film, TV, animation, video games, theatre, orchestral concerts or museum exhibitions can claim reliefs or expenditure credits. Film, TV and video games now use expenditure credits, which can be paid out even if the company makes a loss.

R&D tax relief is a separate route.

Upsides and downsides

Upsides

  • A legal right if you qualify, with no application to win
  • No repayments and no shares given up
  • Capital allowances can cut the real cost of new equipment sharply in the year you buy it
  • Film, TV and video games credits can be paid out even when you make a loss

Downsides

  • Does not bring in cash up front. You still have to pay for the asset or project first
  • Most reliefs are worth little if you make no taxable profit
  • Patent Box and creative reliefs have detailed rules and often need an adviser

Risks

  • Claiming for items that do not qualify, leading to tax, interest and penalties
  • A tax charge when you sell equipment you have claimed for
  • Rules and rates change in Budgets, so check them each year

What it costs

How it is priced
A reduction in tax, or a payable tax credit for some creative-industry claims
Costs that are easy to miss
  • Adviser fees for preparing claims, especially Patent Box and creative reliefs
  • Record-keeping to show what qualifies
  • Selling equipment you claimed for can bring a tax charge

Depends on what you spend and your tax rate. The Annual Investment Allowance covers up to £1 million of spending a year. Full expensing has no upper limit.

Does it fit?

Could fit when

  • You are buying machinery or equipment for the business
  • You make a profit from a product or process you have patented, or could patent
  • You make film, TV, games, theatre or other creative productions

Unlikely to fit when

  • You make no taxable profit at the moment, so most reliefs would only carry forward
  • You need cash in days or weeks. Tax relief arrives with your tax return

Who can use it

  • Business types: Sole trader, Partnership, Private limited company, LLP, Public limited company, Community interest company, Co-operative or community benefit society, Charity
  • Capital allowances are open to sole traders, partnerships and companies. Full expensing is for companies paying Corporation Tax only
  • Patent Box and creative-industry reliefs are for companies paying Corporation Tax only
  • Most reliefs only reduce tax on profits, so they help most when you make a taxable profit

Am I ready?

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Next to prepare
  1. Records of what you bought
  2. Your tax position
  3. Patent ownership (for Patent Box)

Regulation and protections

Not FCA regulated

Statutory tax reliefs administered by HMRC. Disputes go through HMRC's review process and the tax tribunals.

Types of provider: None needed. You claim through your tax return; Accountants and tax advisers.

Also consider

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Sources

  1. GOV.UK: Claim capital allowances: Annual Investment Allowance · checked 7 October 2026
  2. GOV.UK: Check if you can claim full expensing or 50% first year allowances · checked 7 October 2026
  3. GOV.UK: Claim capital allowances: 40% first-year allowance · checked 7 October 2026
  4. GOV.UK: Corporation Tax: the Patent Box · checked 7 October 2026
  5. GOV.UK: Corporation Tax: creative industry tax reliefs and expenditure credits · checked 7 October 2026
  6. GOV.UK: Claiming Video Games Expenditure Credits for Corporation Tax · checked 7 October 2026