How do capital allowances work for sole traders in Ireland?

Capital allowances in Ireland allow self-employed sole traders to deduct the cost of capital assets (equipment, machinery, vehicles) used in their business over a set period. The standard rate is 12.5% per year over 8 years, applied on a straight-line basis. Unlike the UK's Annual Investment Allowance, Ireland doesn't have a general 100%-in-year-one allowance for most assets. Qualifying assets: computers, machinery, tools, office equipment, vehicles, and intangible assets (with some exceptions). Balancing allowances and balancing charges: if you sell or dispose of the asset before the 8-year period ends, you may get a balancing allowance (for remaining undeducted cost) or face a balancing charge (if sale proceeds exceed remaining tax value). All amounts are apportioned if the asset has any private use.

  • Standard rate: 12.5% per year over 8 years (straight-line)
  • No single-year 100% allowance for most assets (unlike UK AIA)
  • Covers: computers, machinery, tools, vehicles, office furniture
  • Disposal before 8 years: balancing allowance or balancing charge applies
  • Must apportion for private use — only business proportion is claimable

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