Capital Allowances on Equipment in Ireland: What You Can Claim and When (2026)

Here's a question we hear every November. "If I buy the machine before Christmas, do I get the tax break this year?"

Usually, yes. And the timing of a purchase can be worth thousands. But most business owners we speak to only half understand how capital allowances work. They know there's "some kind of write-off", they're not sure how fast it comes, and they've no idea that the rules for business cars are about to tighten on 1 January 2027.

So let's fix that. This guide explains how capital allowances on equipment work in Ireland in 2026: the standard 12.5% wear and tear allowance, the 100% Accelerated Capital Allowance for energy-efficient kit, the car emission limits and what's changing, how buying, hire purchase and leasing change who claims what, and worked examples showing what it's actually worth to you. We're a finance broker, not tax advisers, so treat this as a briefing to take to your accountant.

How Capital Allowances on Equipment Work in Ireland

You can't deduct the cost of a machine from your profits in one go, the way you would with rent or wages. Instead, Revenue gives you capital allowances: a tax deduction spread over the asset's life.

For plant and machinery, that's the wear and tear allowance of 12.5% a year over eight years. Buy a €40,000 machine and you deduct €5,000 a year from your taxable profits for eight years. It covers most of what a business buys: machinery, tools, vans and trucks, tractors, catering and medical equipment, IT, furniture and fittings.

To claim, Revenue's conditions are simple enough:

• You've incurred capital expenditure on the asset for your trade.
• The asset belongs to you.
• It's in use in your trade at the end of your accounting period.
• If you use it partly for non-business purposes, the allowance is cut back to the business share.

Limited companies claim on the CT1 corporation tax return. Sole traders and partners claim on their Form 11. There's no pre-approval. It runs through self-assessment, so your accountant handles it at year end.

What doesn't count as plant and machinery?

The building itself, mostly. The structure, walls, floors and general fit-out of your premises aren't plant, even though they cost a fortune. Qualifying industrial buildings get their own allowance of 4% a year over 25 years, and plenty of commercial premises get nothing at all. The grey area is the stuff in between: specialist electrical installations, cold rooms, extraction systems and bespoke fixtures can sometimes qualify as plant where they do a job in your trade rather than just forming part of the building. That line is argued over all the time, so on a big fit-out it's worth paying your accountant, or a capital allowances specialist, to go through the invoices item by item.

Buy Before Your Year End: The Timing Trick Worth Knowing

This is the one most people miss.

The allowance for a year depends on the asset being in use at the end of your accounting period, not on when in the year you bought it. Revenue's own example shows a machine in use on 31 December getting the full 12.5% for that 12-month period. So buy in the first week of your financial year or the last, you get the same first-year allowance. (It's reduced if your accounting period is shorter than 12 months.)

What does that mean in practice? If your year end is 31 December and you're planning to buy a machine in January anyway, bringing the purchase forward into December, and getting it working, pulls a full year's allowance into this year's tax bill.

Two warnings, though. The asset has to be genuinely in use, not sitting in its crate. And don't buy something you don't need just to save tax. Spending €40,000 to save €625 of corporation tax this year is not a plan.

Financing it rather than paying cash doesn't change the timing. Through our asset finance service we regularly arrange December deals so the kit is delivered and working before year end.

Hire Purchase, Leasing or Buying: Who Claims the Allowance?

How you pay for an asset changes who gets the tax relief. Here's the short version (our guide to hire purchase vs leasing covers how to choose between the products themselves):

The big one: on hire purchase you claim allowances on the whole cost from the start, even though you're paying it off over years. On a lease, you don't get allowances at all, but you deduct the rentals instead.

And here's the catch for leasing. Revenue's guidance on the Accelerated Capital Allowance says the equipment must be owned by the business. Leased, let or hired equipment doesn't qualify. If you're buying energy-efficient kit, that alone can decide the structure.

The Accelerated Capital Allowance for Energy-Efficient Equipment

The Accelerated Capital Allowance (ACA) lets you write off 100% of the cost in the first year the equipment is used in your trade, instead of 12.5% a year over eight.

Here's how it works:

• The equipment must be new and listed on the SEAI's Triple E register of energy-efficient products.
• It must fall into one of ten technology classes: motors and drives, lighting, building energy management systems, ICT, heating and electricity provision, HVAC controls, electric and alternative fuel vehicles, refrigeration and cooling, electro-mechanical systems, and catering and hospitality equipment.
• There's a minimum spend per class. It's €1,000 for most, €3,000 for lighting and €5,000 for building energy management systems.
• Equipment that runs directly on fossil fuel has been excluded since 1 January 2022.
• Both companies and sole traders can claim. The scheme runs until 31 December 2030, after Budget 2026 and Finance Act 2025 extended it.

Always check the specific make and model is on the Triple E register before you buy. "Energy efficient" on a supplier's brochure isn't the same thing.

Commercial solar PV systems are one of the more popular ACA purchases right now, especially with the bigger SEAI grant. We cover that in our guide to financing solar panels for your business.

Grants reduce what you can claim

If an SEAI grant or another State grant pays for part of the equipment, you can only claim allowances on what you actually paid. A €50,000 project with a €20,000 grant gives you allowances on €30,000.

Capital Allowances on Business Cars and Vans: The 2027 Change

Cars are where the rules get fiddly, and where a big change lands in two months.

Vans, trucks and tractors aren't restricted. They're treated like any other plant and machinery: 12.5% a year on the full cost. (Double-cab pickups and crew vans can be treated as cars, so check.) Our guide to van leasing tax covers VAT and benefit-in-kind on vans.

Cars are capped at a "specified amount" of €24,000, and how much of that you get depends on CO2 emissions. Here's what applies now and what's coming:

The 2027 change comes from Finance Act 2024. The same limits apply to lease payments on cars.

So what does that mean for you? A €45,000 car at 130g/km bought in December 2026 gets allowances on €24,000: €3,000 a year. Buy the same car in January 2027 and it's €12,000: €1,500 a year. If a company car is on your shopping list, the timing matters.

Electric cars can go a different route. You can opt for the ACA under the energy-efficient scheme, based on the lower of the car's cost or €24,000, instead of the emissions scheme, but not both.

Worked Examples: What Capital Allowances Are Actually Worth

Let's put real numbers on it. Say you buy €80,000 of equipment, and it's in use before your year end.

A few things to notice.

Over eight years, the standard allowance gives the same total relief. The ACA doesn't give you more relief overall. It gives it to you now. For a business that's just stretched itself to buy the kit, that cash-flow difference is the whole point.

Sole traders get more value per euro. The same allowance saves tax at your marginal rate, so it's worth roughly three times more to a sole trader paying 40% than to a company paying 12.5%. If you're a sole trader looking at finance, factor that into which year you buy. (USC and PRSI can add to that, and your accountant will work out your exact position.)

You need profits to use it. If the allowance is bigger than your profit for the year, the unused part can generally be carried forward, but it doesn't give you cash back today.

Selling or Scrapping Equipment: Balancing Charges and Allowances

What happens when you sell the kit before the eight years are up?

Revenue compares what you get for it with its tax written-down value, which is the cost minus the allowances you've already claimed.

• Sell for more than the written-down value and you face a balancing charge. You pay tax on the difference, because you've had more relief than the asset really cost you.
• Sell for less, or scrap it, and you get a balancing allowance for the shortfall. That's how relief on a laptop you binned after four years finally catches up, and it's one reason our guide to IT equipment leasing argues leasing often suits short-life tech better.

This matters if you trade in kit regularly, or if you're thinking of raising cash through a sale and leaseback. Our guide to asset refinance explains why you should check for a balancing charge before you sell your equipment to a lender.

What changed in the latest Budgets?

Budget 2026 (October 2025) extended the energy-efficient ACA and the ACA for gas vehicles and refuelling equipment to 31 December 2030. Budget 2027 (October 2026) didn't change the standard 12.5% rate. For farmers, Finance Bill 2026 proposes extending the farm safety equipment allowance (50% a year over two years) to 31 December 2029 and adding new items to the list, including a mobile cattle crush. Check the final Finance Act with your accountant once it's passed. Our guide to farm machinery finance covers how farmers fund that kit.

Get the Timing and Structure Right, Then Let Your Accountant Run It

Capital allowances reward people who plan. Get the asset working before your year end. Check the Triple E register before you buy anything energy-related, and own it rather than lease it if you want the 100% write-off. If a company car is coming, think hard about buying before 1 January 2027. And remember that a grant reduces what you can claim.

One clear line to finish: this is a general guide, not tax advice. Rules have exceptions, especially around cars, mixed business use and disposals. Talk to your accountant before you buy, and get them to model the numbers on your real profits and year end. Then, once you know the structure you want, we'll find the finance to match it.

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