Capital Allowances \u00b7 2026
Capital Allowances Ireland 2026: Rates, Claims & Accelerated Relief
Capital allowances let you spread the cost of business assets over their useful life, reducing your taxable profits each year. Plant and machinery qualifies at 12.5% straight-line, industrial buildings at 4% straight-line, and energy-efficient equipment can be 100% expensed in year one. Use our Landlord Tax Calculator to claim capital allowances on rental properties.
Capital Allowance Rates by Asset Type
Different asset categories qualify for different rates and write-off periods. The allowance is calculated on the straight-line basis — the same amount each year over the asset's life.
| Asset Type | Annual Rate | Write-Off Period | Cap? |
|---|---|---|---|
| Plant & Machinery | 12.5% | 8 years | No |
| Industrial Buildings | 4% | 25 years | No |
| Motor Vehicles (passenger) | 12.5% | 8 years | 24,000 |
| Motor Vehicles (commercial) | 12.5% | 8 years | No cap |
| Energy-Efficient Equipment | 100% | Year 1 | Qualifying list |
| Computer Hardware | 12.5% | 8 years | No |
| Fixtures & Fittings (rental) | 12.5% | 8 years | No |
How Capital Allowances Are Calculated
Capital allowances are claimed on the tax-written-down value of the asset. The straight-line method means you claim the same amount each year, regardless of the asset's actual market value.
Example: 50,000 Machine at 12.5% Straight-Line
| Year | Opening TWDV | Allowance | Closing TWDV |
|---|---|---|---|
| 1 | €50,000 | €6,250 | €43,750 |
| 2 | €43,750 | €6,250 | €37,500 |
| 3 | €37,500 | €6,250 | €31,250 |
| 4 | €31,250 | €6,250 | €25,000 |
| 5 | €25,000 | €6,250 | €18,750 |
| 6 | €18,750 | €6,250 | €12,500 |
| 7 | €12,500 | €6,250 | €6,250 |
| 8 | €6,250 | €6,250 | 0 |
| Total | €50,000 |
Tax saving over 8 years
€20,000
assuming 40% tax rate (50,000 x 40%)
Annual deduction: 6,250 per year for 8 years. At 40% tax rate, that is 2,500 in tax saved each year.
Motor Vehicle Capital Allowances
The treatment of motor vehicles depends on whether the vehicle is a passenger car or a commercial vehicle, and whether it has CO2 emissions.
Passenger Car Example: 40,000 Vehicle
| Actual cost | €40,000 |
| Capped cost (max) | €24,000 |
| Annual allowance @ 12.5% | €3,000 |
| Write-off period | 8 years |
Key rules for passenger cars
- Cost cap: 24,000 for cars (not vans)
- Electric vehicles: no cap (full cost qualifies)
- Low-emission cars (0-50g/km): cap increased to 26,000 in 2026
- Commercial vehicles: no cap
Accelerated Capital Allowances (ACA)
The Accelerated Capital Allowances scheme allows businesses to claim 100% first-year reliefon qualifying energy-efficient equipment. This is one of the most valuable tax reliefs available in Ireland.
Qualifying Technologies (SEAI List)
- Energy-efficient lighting (LED)
- HVAC systems (high-efficiency)
- Electric motors and drives
- Refrigeration equipment
- Combined heat and power (CHP)
- Solar photovoltaic panels
- Heat pumps
- Building energy management systems
Equipment must be on the SEAI's Triple-E register of qualifying technologies.
ACA Example: 30,000 LED Lighting Upgrade
| Cost of installation | €30,000 |
| Normal allowance (12.5%) | €3,750 per yr for 8 yrs |
| ACA allowance (100%) | €30,000 in Year 1 |
| Tax saved @ 12.5% CT | €3,750 in Year 1 |
| vs normal over 8 years | €3,750 total |
The ACA gives the same total relief but front-loaded into Year 1 — a significant cash flow advantage.
Industrial Buildings Allowance
Industrial buildings (factories, warehouses, manufacturing facilities) qualify for capital allowances at 4% per year over 25 years. The allowance applies to the construction cost of the building, not the land.
| Building cost | €500,000 |
| Annual allowance @ 4% | €20,000 |
| Write-off period | 25 years |
| Total deductions | €500,000 |
Claiming Capital Allowances
Identify qualifying assets
Determine which assets qualify and at what rate. Not all capital expenditure qualifies — land, goodwill, and certain intangible assets are excluded.
Calculate the allowance
Apply the appropriate rate (12.5% or 4%) to the cost, apportioned for the number of months the asset was in use during the year.
Claim on your tax return
Include the allowance on your Form 11 (self-employed) or corporation tax return (CT1). Keep records of purchase dates, costs, and calculations.
Track written-down values
Maintain a capital allowances schedule showing each asset's cost, annual allowance, cumulative allowances, and tax-written-down value. This is essential when assets are sold.