Capital Allowances on Air Conditioning: What Qualifies

Yes, air conditioning qualifies for capital allowances in the UK because HMRC treats it as an integral feature of a building. It goes in the special rate pool, which gets 6% writing down allowances, though the annual investment allowance or, for companies, a 50% first-year allowance can apply first.

Picture a finance director with an air conditioning quote on the desk and a year end a few months away. The question underneath the technical ones is "what can we get back on this?" It is a fair question, and the answer is not complicated, but it does depend on who owns the system, what kind of business you are, and how the work is invoiced. We install the systems, we are not tax advisers, so this page explains what gov.uk and HMRC say as of October 2026 and then hands you to your accountant.

At a glance

Question	What gov.uk and HMRC say (as of October 2026)
Is air conditioning covered?	Yes. Gov.uk lists "air-conditioning and air cooling systems" among the integral features you can claim on
Which pool does it go in?	The special rate pool, which has a 6% writing down allowance rate
Annual investment allowance	The AIA amount is £1 million, and it can be claimed on most plant and machinery
Companies only	For special rate expenditure, a 50% first-year allowance, with the remaining balance going into the special rate pool
Main pool rate	14% from 1 April 2026 for Corporation Tax and from 6 April 2026 for Income Tax, down from 18%
Sole trader or partnership on the cash basis	You can only claim capital allowances on business cars

Source: GOV.UK, what you can claim on and GOV.UK, work out your writing down allowances

Why air conditioning is an integral feature

Capital allowances are tax relief on plant and machinery, and a building's fixed services are an awkward fit because they are bolted into something you cannot claim on. The legislation deals with that by listing certain building services as "integral features". Section 33A of the Capital Allowances Act 2001 sets out the list, and the item that matters here reads "a space or water heating system, a powered system of ventilation, air cooling or air purification" (Capital Allowances Act 2001, section 33A).

The Act says "air cooling", not "air conditioning". Gov.uk's plain version of the same list does use the words air-conditioning, so in practice the two are read together. The same section also catches electrical systems including lighting, cold water systems, lifts, escalators and moving walkways, and external solar shading.

One distinction catches people out. Gov.uk says alterations to a building to install plant or machinery can be claimed, but repairs cannot. Gov.uk tells sole traders and partnerships to claim repairs as business expenses, and companies to deduct them as a business cost. Where a particular job falls on that line is a conversation for your accountant. If you are weighing a repair against a replacement, our guide to repairing or replacing an older R22 or R407C system covers the engineering side of that decision.

Which allowances can apply

Gov.uk sets out several allowances, and if an item qualifies for more than one you can choose which to use. For a system in the special rate pool, the realistic candidates are the annual investment allowance, the 50% first-year allowance for companies, and writing down allowances on whatever is left. The table below sets out what gov.uk says about each, and nothing in it is a calculation for your own case.

Allowance	Rate or amount	Who can claim	Conditions stated on gov.uk
Annual investment allowance (AIA)	£1 million	Businesses generally, including sole traders and partnerships	Most plant and machinery. Not business cars, items you owned before using them in the business, or gifts. Partnerships need every member to be an individual
Full expensing	100% of the cost in the year of purchase	Companies only	Main rate expenditure. New and unused, bought from 1 April 2023, not a car. This is the route for main pool plant, not for integral features
50% first-year allowance	50% of the cost in the year of purchase	Companies within Corporation Tax only	Special rate expenditure, which includes integral features. New and unused, not a car. The remaining balance goes into the special rate pool
40% first-year allowance	40% of the cost	All businesses, including unincorporated ones	Main rate pool assets, spent on or after 1 January 2026, new and unused, not second-hand, not cars
Writing down allowance, special rate pool	6% a year	Anyone with special rate expenditure	Applies to integral features and long-life items among others
Writing down allowance, main pool	14% a year from April 2026	Anyone with main rate expenditure	Was 18%. A hybrid rate applies if your accounting period straddles the change date

Source: GOV.UK, annual investment allowance and GOV.UK, check if you can claim full expensing or 50% first-year allowances. The 40% row is from the two pages linked in the Autumn Budget section below, and the writing down rates are from the rates and pools page linked under At a glance.

Two things stand out. First, full expensing is the headline everyone has heard of, and on gov.uk's wording it covers main rate expenditure. Air conditioning is an integral feature, which sits in the special rate pool, so the 100% figure is not the one that applies to it. Second, the 40% first-year allowance is described on gov.uk for assets within the main rate pool, so read that page carefully before assuming it reaches an air conditioning system. Your accountant will know which of these your particular spend falls under, and whether the AIA is already being used up elsewhere in the business.

What the Autumn Budget 2025 changed

The change that matters in practice came out of the Autumn Budget 2025. HMRC's policy paper, published on 26 November 2025, reduces the main pool writing down allowance from 18% to 14%, from 1 April 2026 for Corporation Tax and 6 April 2026 for Income Tax, and introduces the new 40% first-year allowance for expenditure incurred on or after 1 January 2026 (HMRC policy paper, new first-year allowance and main rate of writing-down allowances). The paper says the special rate pool is not changed by the measure, so it stays at 6%. Gov.uk's own guidance adds that the asset must be new and unused and within the main rate pool, with cars excluded (GOV.UK, 40% first-year allowance).

If you are reading this after a later Budget, check gov.uk before relying on any of the rates above. They have moved several times in recent years, and a finance director working from a page that is two Budgets old is a worse position than not looking at all.

Air conditioning, refrigeration and the building itself

Businesses that install both comfort cooling and refrigeration tend to assume the two are treated the same. They are not, and the building is a third case again. The table below sets out what the legislation and HMRC's manual say about each.

What it is	How it is treated	Where the rule comes from
Air conditioning and air cooling system	An integral feature, treated as plant and machinery, allocated to the special rate pool	Section 33A of the Capital Allowances Act 2001 and gov.uk's list of integral features
Commercial refrigeration equipment	"Refrigeration or cooling equipment" is on HMRC's List C of items saved from the building exclusions, but it still has to pass the normal common law test for plant. The pages read do not name a pool for it, so ask your accountant	HMRC Capital Allowances Manual, CA22030
A cold store or cold room	"Cold stores only qualify for PMAs to the extent that they function as 'plant' in common law", and "it will be rare for an entire cold store building to qualify"	HMRC Capital Allowances Manual, CA22120
The building itself	You cannot claim on buildings. Buildings cannot receive the 6% rate, though some non-residential buildings may qualify for a 3% allowance	Gov.uk, what you can claim on, and rates and pools
Leased equipment	You cannot claim on leased items unless they are under a hire purchase contract or long funding lease. You must own the item	Gov.uk, what you can claim on

Source: HMRC Capital Allowances Manual, CA22030 and HMRC Capital Allowances Manual, CA22120. The other rows are from the section 33A, what-you-can-claim-on and rates-and-pools pages linked above.

The refrigeration row is the one to be careful with. Being on List C does not make an item plant. HMRC's manual says an item on the list "has to pass the normal tests for being plant in common law before allowances are due", and the pages we read do not say which pool refrigeration equipment sits in. We will not guess at it. Where a project combines a cold room, display cabinets and air conditioning, the invoice split between those items is the first thing your accountant will want to see.

Practical points before you sign for an install

None of this is tax advice, but a few practical points come up on projects often enough to be worth raising before the order goes in.

• Check who will own the system. Gov.uk says you must own the item to claim on it, with a hire purchase contract or long funding lease the exception, so a straight rental or landlord-owned installation changes the picture.
• Ask for the quote and invoice to separate the air conditioning, any controls, any electrical work and any building work. Your accountant can then decide what goes where.
• Check the timing against your accounting period. Rates and eligibility depend on when the spending was incurred, and the main pool rate changed part way through 2026.
• Keep the paperwork, including the invoice, the date and the specification of what was installed, because your accountant will need all three.
• Ask whether the installation is new and unused equipment, because the first-year allowances on gov.uk require it.

If the aim is also to keep running costs sensible, our piece on air conditioning running costs in the UK is a good companion, and for a larger multi-zone job the VRF air conditioning guide explains what that kind of system involves. For refrigeration, commercial refrigeration energy costs covers the running side.

When to talk to an installer

Talk to your accountant about the tax and to an installer about the system, and ideally do both before the order is placed. Be Cool is a family-run London firm that has been installing commercial air conditioning since 2004, with F-Gas certified engineers and more than 2,000 projects behind us. If you are planning a commercial air conditioning installation in London, we can write the quote so that the equipment, controls and installation work are itemised clearly for whoever handles your books.

Frequently asked questions

Can I claim capital allowances on air conditioning?

Generally yes, if you own the system and are claiming as a business that can use capital allowances. Gov.uk lists air-conditioning and air cooling systems among the integral features you can claim on. Confirm your own position with your accountant.

What is the special rate pool?

It is the pool for integral features, long-life items, solar panels, thermal insulation added to a building and some cars. Gov.uk gives the writing down allowance rate for it as 6%.

Does full expensing apply to air conditioning?

Gov.uk describes full expensing as the 100% deduction for main rate expenditure, available to companies. Integral features are special rate, so the 50% first-year allowance is the company route that gov.uk describes for them.

Can a sole trader claim?

A sole trader or partnership that is not on the cash basis can use the annual investment allowance and writing down allowances. If you are on the cash basis you can only claim capital allowances on business cars, according to gov.uk.

Is a repair claimable the same way as a new install?

Gov.uk says alterations to a building to install plant can be claimed but repairs cannot. Repairs are treated as business expenses, so ask your accountant how a given invoice should be treated.

Do the rates change?

Yes, and they changed in 2026, with the main pool rate dropping from 18% to 14% from April. Everything above is as of October 2026, so check gov.uk again at the time you buy.

Before you order

The honest summary is that air conditioning is clearly named in the rules, and the risk sits in the paperwork around it. Decide who owns it, get the quote itemised, tell your accountant the date, and let them pick the allowance. Then you can spend your time on the part we do, which is making the room comfortable.

About the author: Ali Elm runs Be Cool Refrigeration & Air Conditioning, a family-run London firm that has been installing, servicing and repairing commercial refrigeration and air conditioning since 2004. His F-Gas certified team has delivered more than 2,000 projects across London and the South East.

Last updated: 28 October 2026