Computer equipment

Conditions

• Equipment used in the business usually qualifies for capital allowances. The Annual Investment Allowance (AIA) gives full relief in the year of purchase, up to £1 million per accounting period (sourced from GOV.UK Content API, June 2026 — re-check after each Budget as this figure has changed before). AIA is available to sole traders, partnerships, and limited companies.
• Under cash basis accounting, computers and equipment are claimed as an allowable expense directly rather than through capital allowances (cash basis only permits capital allowances on business cars).
• Where there is private use, the claim is restricted to the business proportion.
• For a limited company, the equipment is a company asset bought with company funds.
• Employees can claim capital allowances on equipment necessarily required for the job, but only where there is no significant private use and the employer has not provided the item.

Common mistakes

• Treating a capital purchase as a normal day-to-day expense rather than claiming it correctly as a capital allowance.
• Ignoring private use on a device that is also used personally.
• An employee buying kit the employer would have provided and assuming it is automatically claimable.

What to keep

• Purchase invoices showing the item and cost.
• A note of the business-use proportion where the device is also used privately.

Real-world example

A sole trader buys a £1,200 laptop used almost entirely for work. They claim it through the Annual Investment Allowance, restricting the claim slightly to reflect occasional personal use.

Frequently asked

Related allowances