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The UK government wishes to encourage investment in plant and machinery, and other capital expenditure. The capital allowances regime enables tax relief to be obtained across the lifetime of an asset. In some cases, full relief may be available on purchase of an asset.

Capital allowances are particularly relevant to Private Equity backed businesses during the holding period as there is a significant focus on cash extraction. However, we also routinely advise clients on capital allowances during the deal phase and prior to exit.

Changes to the rules on interest deductibility and restrictions on carried forward losses have increased the value of relief available through the capital allowances regime.