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Capital allowances on care homes

Equipment, fixtures and the building itself can all attract tax relief in a care home. Care homes count as non-residential for the Structures and Buildings Allowance, at 3% a year.

The allowances

The Annual Investment Allowance gives full relief on up to £1 million a year of qualifying plant and machinery. Companies can also claim full expensing on new and unused plant and machinery, not cars. From 1 January 2026 a 40% first-year allowance applies to new main-pool assets for all businesses. Spending not covered goes into the main pool at 14% a year from April 2026, or the special rate pool, which includes integral features, at 6%.

Capital allowance rates for 2026/27

  • Annual Investment Allowance, first £1m100%
  • Full expensing, companies, new plant100%
  • First-year allowance, new main-pool assets40%
  • Main pool, a year14%
  • Special rate pool, a year6%
  • Structures and Buildings Allowance, a year3%
Sources: GOV.UK, Capital allowances: Annual Investment Allowance, full expensing, and rates and pools; Capital Allowances Act 2001, section 270CF.

Care homes and the building allowance

The Structures and Buildings Allowance gives 3% a year on the cost of non-residential buildings. Section 270CF of the Capital Allowances Act 2001 excludes from residential use accommodation provided with personal care for people in need of it by reason of old age or disability. HMRC's manual confirms that a nursing home or residential care home is not a dwelling-house (CA11520), and that only care home accommodation which provides personal care qualifies (CA92800).

Budget 2026

Budget 2026, on 29 October 2026, announced a cut in the main pool rate to 12% from April 2027 and a rise in the first-year allowance to 50% from 1 January 2027. Neither is law yet.

How we help

We review the fixed asset register when a home is bought, extended or refurbished, claim the allowances in the accounts and tax return, and keep a record of the qualifying costs for each building.

Common questions

What is the Annual Investment Allowance?

Full relief on up to £1 million a year of qualifying plant and machinery.

Can a sole trader claim full expensing?

No. Full expensing is for companies, on new and unused plant and machinery.

Related reading

Business rates for care homes and nurseries

Multipliers, small business rate relief and charity relief for 2026/27.

Selling a care business before the relief limit falls

The £500,000 lifetime limit from April 2027 and what it does to the tax on a sale.

VAT for care homes, home care and nurseries

The welfare exemption, agency staff, registration and partial exemption.

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