Capital Allowances on a Restaurant Fit-Out
Written and reviewed by the Hospitality Accountants editorial team. Last reviewed 27 July 2026.
A restaurant or bar fit-out is one of the largest cash outlays an operator makes, and much of it qualifies for tax relief through capital allowances. The relief does not follow the whole build evenly: kitchens, equipment and fixtures are treated differently from the parts of the work HMRC classes as integral features. This guide explains how the allowances split a fit-out and how much you can claim in year one.
The three levers are the Annual Investment Allowance, full expensing for companies, and the special rate pool for integral features. Getting an item into the right pool changes how quickly you get the relief. Where a claim sits alongside a set of accounts we prepare, our accountants for restaurants service builds it into the return.
The Annual Investment Allowance
The Annual Investment Allowance lets a business deduct the full cost of qualifying plant and machinery in the year of purchase, up to £1,000,000 a year. For most independent fit-outs this covers the whole spend on kitchen equipment, refrigeration, furniture and loose fixtures, giving 100% relief in year one rather than over many years.
The allowance is open to sole traders, partnerships and companies alike, which makes it the workhorse relief for hospitality. The current limit and the qualifying categories are set out on the gov.uk Annual Investment Allowance page.
Full Expensing for Companies
Full expensing is a separate, permanent relief available only to companies that pay Corporation Tax. It gives a 100% first-year deduction on new main-rate plant and machinery, and a 50% first-year deduction on new special-rate assets such as integral features. Unlike the Annual Investment Allowance it has no annual cap, which matters for a large multi-site build.
Because full expensing is companies only, a sole trader or partnership cannot use it and relies on the Annual Investment Allowance instead. For a single restaurant within the £1,000,000 limit the two often reach the same year-one result.
Integral Features and the Special Rate Pool
Some parts of a fit-out are integral features: electrical systems, cold and hot water systems, heating, air-conditioning and lifts. These fall into the special rate pool and, where they are not covered by the Annual Investment Allowance or full expensing, are written down at 6% a year on a reducing balance. That is a slow drip of relief compared with a first-year deduction.
The practical point is to claim the Annual Investment Allowance against integral features first, because £1,000,000 of it can absorb the special-rate spend and give full relief now. The pool categories are listed on the gov.uk capital allowances rates and pools page.
What a Fit-Out Claim Includes
A claim rarely matches the builder's single invoice. The work has to be split between items that qualify as plant and machinery, integral features, and elements that do not qualify at all, such as the fabric of the building itself. Getting that split right is where a fit-out claim is won or lost.
We work from the detailed costings, not a lump sum, so that kitchen extraction, walk-in fridges, bar equipment and the electrical and water systems each land in the right pool. The more granular the breakdown, the more of the spend attracts relief now rather than slowly.
Sole Traders Versus Companies on Relief
The structure you trade through changes the toolkit. A company can use both the Annual Investment Allowance and full expensing, while a sole trader or partnership uses the Annual Investment Allowance alone. For most single-site fit-outs the £1,000,000 allowance is enough that the difference is timing rather than total relief.
Where the choice of structure is still open, the fit-out is one input among several, and it sits alongside the wider business structure decision rather than driving it on its own.