Availability of capital allowances

S71 Capital Allowances Act 2001

Except where the Corporation Tax intangible assets regime applies (see below), capital allowances are available for capital expenditure on a ‘right to use or otherwise deal with’ computer software for the purposes of a trade.

Computer software is usually acquired under licence, payment for which may take the form of regular amounts or a lump sum. You should give critical consideration to whether lump sums paid out for licences are in law capital expenditure.

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