Computer peripherals

Conditions

1. Computer peripherals — monitors, keyboards, mice, docking stations, webcams, headsets, and similar items you keep to use in your business — are plant and machinery for capital-allowances purposes.
2. Peripherals qualify for the Annual Investment Allowance (AIA), which lets you deduct the full value of the item from your profits before tax. The AIA amount is £1 million, and you get a new allowance for each accounting period. A 40% first-year allowance is available for expenditure incurred on or after 1 January 2026 on plant or machinery that was bought new and unused, qualifies for the main rate of writing-down allowance and is not a car; second-hand assets are excluded, and there is a specific exclusion for overseas leasing. The relief is available to all businesses, not just incorporated ones. In the next accounting period you claim writing-down allowances on the remaining 60% of the cost. For most small businesses the AIA gives full relief in the year of purchase anyway.
3. The main rate of writing-down allowance changed from 18% to 14% on 1 April 2026 for Corporation Tax and 6 April 2026 for Income Tax. If your accounting period includes the day the rate changed, you must work out a hybrid rate for that period.
4. Under the cash basis — the default method of accounting for sole traders and partnerships without corporate partners from 6 April 2024 — peripherals are claimed directly as an allowable business expense in the year you pay for them rather than through capital allowances. Cash basis users can only claim capital allowances on business cars.
5. The line between a capital item and a running cost is the life of the item, not its price. Where a tangible asset has an economic life of less than one year, HMRC accepts that expenditure on it is of a revenue nature (BIM35415). A cable or a mouse replaced every few months falls on that side; a monitor, docking station or headset expected to last several years is a capital item and goes through capital allowances under traditional accounting, however modest its cost.
6. Where peripherals are also used personally — a monitor at home used in the evenings, or a headset also used for personal calls — the claim is restricted. If you are a sole trader or in a partnership you cannot claim the full value of an item you also use outside the business: reduce the capital allowances you claim by the amount of that outside use, and keep a brief note of how the split was determined.
7. For a limited company, peripherals purchased by the company for business use are company assets relieved through capital allowances. Office equipment provided only for business use is exempt from reporting, but an asset made available for a director's or employee's private use as well must be reported on form P11D, with Class 1A National Insurance due on the value of the benefit.
8. Employees rarely qualify. HMRC's guidance is that most employees will not be able to satisfy the statutory test for capital allowances in section 36(1) CAA 2001 in relation to the purchase of computers, laptops and their peripherals: even where the equipment is essential for the duties, it is very often the case that the employer will supply what is needed, and it is not enough to claim that what the employer provides or will provide is inadequate (EIM36730). GOV.UK's employee guidance sets the same conditions from the other side: you can only claim where you need the equipment to do your job, and not at all where the employer gives you all the money back or offers an alternative.
9. On private use, the two HMRC sources state the position as follows. GOV.UK's employee guidance: you can only claim tax relief for equipment expenses where you use the equipment for work and there's no significant private use. HMRC's Employment Income Manual: the plant or machinery does not have to be 'wholly and exclusively' used for the performance of the duties, and if there is private use the allowances can be apportioned (EIM36540); apportionment is made on a 'just and reasonable' basis having regard to all the circumstances, principally the actual use made of the item in the year of assessment (EIM36570). Small items that will last less than 2 years are claimed in a different way from substantial equipment.

Common mistakes

• Claiming 100% of the cost of a peripheral kept at home where there is also personal use.
• Treating a durable peripheral as a running cost because it was cheap. The test HMRC applies is the economic life of the item, not its price.
• Claiming the AIA on a monitor or headset you already owned personally before you started using it in the business. You cannot claim AIA on items you owned for another reason beforehand — claim writing-down allowances instead, based on the market value when you brought the item into the business.
• An employee assuming a laptop or monitor is claimable. HMRC's starting point is that most employees cannot satisfy the test for computers and their peripherals.

What to keep

• Purchase invoices or receipts showing the peripheral, date, and cost.
• A note of the business-use proportion for any item also used privately.
• Where an item you already owned is brought into the business, a record of its market value at that point.

Real-world example

A sole trader working from home on traditional accounting buys a 32-inch monitor (£620), a mechanical keyboard (£85), and a webcam (£90) used entirely for business. The total £795 is claimed under the Annual Investment Allowance in the year of purchase. She separately buys a replacement USB cable costing £8 that she expects to replace within the year — this is a revenue running cost rather than a capital item.

Frequently asked

Related allowances