Tax Allowances for Caravans Used in the Business

08 May 2024

We originally published this post on caravans used in the business on 21 June 2017 and updated it on 8 May 2024 for freshness, accuracy, and comprehensiveness.

You can claim tax relief, known as capital allowances, for plant and machinery that you keep to use in your business. Assuming all criteria are met, the cost of items such as tools, equipment, desks and computers can be offset against profits in the year in which they are incurred. This is subject to the annual investment allowance, which is currently £1,000,000.

However, you cannot claim capital allowances for assets in or on which the business is carried out. This includes land, buildings, and other related structures.

This distinction is important when determining whether capital allowances are available for something such as a caravan. Although a caravan would typically be considered an asset in which the business is carried out, if it is intended to be moved around in the course of the qualifying activity (even if it is only moved from its summer site to winter quarters), then there may be an opportunity to claim capital allowances. HMRC guidance, however, focuses on caravan sites, so there is some ambiguity regarding the use of caravans in other trades.

By contrast, farmers can claim tax relief on a caravan used to house a farm employee, even if it occupies a fixed site and is used solely for residential purposes (which could make for a few happy campers). However, if you are going to make such a claim, it is advisable to check with your tax advisors beforehand regarding your specific circumstances.

The rules surrounding caravans and capital allowances can be complex. Contact Green & Co for a consultation with our tax advisors. We’ll help you determine if your caravan qualifies and ensure you’re claiming all the tax relief you’re entitled to. Remember, the current annual investment allowance is a generous £1 million, so there’s a good chance you could benefit.

Jenny Sharma FCCA CTA,Senior Tax Manager

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