Everything businesses need to know about Capital Allowances in Ireland

Capital Allowances are a hugely valuable source of tax relief for businesses in Ireland. For 2022’s tax returns alone, €47bn was claimed as plant and machinery and €147bn as intangible assets.

Companies can claim Capital Allowances on capital expenditure incurred on certain types of business assets and buildings, including:

Capital Allowances rates are currently:

But there are some exceptions to these rates. Below we explain all the different types of Capital Allowances that are available to businesses in Ireland, including where “Accelerated Capital Allowances” (ACAs) are available for certain qualifying expenditures.

Plant and machinery

While there is no definition of plant or machinery in Irish law, it generally refers to any type of tool, furniture, equipment or machinery that isn’t land, a structure or a building.

For expenditure on plant and machinery there is a wear and tear allowance of 12.5% per annum over 8 years.

Computer software

Computer software used internally (i.e., used as part of usual business activities like accounting, project management or marketing) qualifies as normal plant and machinery, allowing businesses to claim a Capital Allowance of 12.5% per annum over 8 years.

Software that’s used for commercial exploitation, where it’s sold or licenced to others, is classified as an intangible asset when claiming Capital Allowances (see below).

Intangible assets

It’s also possible to claim Capital Allowances on income that comes from relevant activities linked to specific intangible assets like patents, trademarks, copyrights, etc. Relevant activities potentially include managing, developing, and exploiting those intangible assets, as well as generating sales where the value primarily comes from using the assets.

Qualifying intangible assets can be treated like plant and machinery, or alternatively, companies can choose a fixed 15-year write-down at 7% per annum of qualifying expenditure and 2% in the final year.

Motor vehicles

Road vehicles are generally treated the same as plant and machinery when claiming Capital Allowances. However Revenue’s emissions-based limits mean that the amount you can claim depends on your vehicle’s CO2 emissions.

Emission thresholds for vehicle Capital Allowances up until 31 December 2026

Currently, you can’t claim Capital Allowances on vehicles with high emissions of over 155g of CO2 per kilometre.

For vehicles with mid-range emissions from 140g to 155g of CO2 per kilometre, Capital Allowances are capped at €12,000, regardless of the car’s price.

For vehicles with low emissions of no more than 140g of CO2 per kilometre, you can claim Capital Allowances up to €24,000 (even if the car costs less).

Emission thresholds for vehicle Capital Allowances from 1 January 2027

From 1 January 2027, the limit of 155g of CO2 per kilometre will be reduced to 141g as a way of encouraging businesses to choose electric vehicles instead.

As such, vehicles with emissions from 121g to 140g of CO2 per kilometre will have their allowance capped at €12,000. Vehicles with emissions from 0 to 120g per kilometre will be able to claim an allowance of up to €24,000.

Accelerated Capital Allowances for motor vehicles

Until the end of 2025, an ACA of 100% is available for the first year for gas and hydrogen vehicles and refuelling equipment.

There is also an ACA of 100% available for electric and alternative fuel vehicles, which runs until 31 December 2025. Alternatively, businesses can claim the standard wear and tear allowance of 12.5% per annum over 8 years (but only if you don’t claim for the accelerated allowance).

Industrial buildings

Businesses that construct, convert or refurbish existing or new buildings or structures can claim 4% per annum over 25 years on most industrial buildings.

An industrial building includes:

A business can also claim Capital Allowances at a rate of 15% per annum over 7 years for the cost of building employees creche and gyms, including equipment costs.

Energy efficient equipment

Until 31 December 2025, businesses can claim an ACA of 100% for the first year for new, energy-efficient equipment. The minimum amount you need to spend on equipment to qualify depends on the equipment type, which we break down below.

Categories with a minimum amount of €1,000 include:

Categories with a minimum amount of €3,000 include:

Categories with a minimum amount of €5,000 include:

Farm safety equipment

ACA can be claimed for specified farm safety equipment purchased between 1 January 2021 to 31 December 2026.

The scheme has an overall budget of €5 million, and farmers must apply for a qualifying certificate from the Minister for Agriculture, Food, and the Marine. Once certified, expenditure can be written off at an accelerated rate of 50% per annum over two years.

Examples of farm safety equipment that qualify for ACA include tractor-jacking systems, chemical storage cabinets, and livestock handling units.

How Leyton can help

At Leyton Ireland, we can help to reduce your overall tax burden. We have a dedicated team of Capital Allowance specialists with a rich range of experience, including surveying and construction, engineering and manufacturing, and science and technology. This depth of knowledge is especially valuable for complex cases like factories and construction sites, where significant tax savings might otherwise be missed. Our team can dig into the details, ensuring that you receive everything that you’re entitled to.

Is your business looking to make a Capital Allowance claim? Get in touch today.

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