Revenue have published guidance on the treatment of capital allowances for the purpose of determining the amount of income chargeable to the USC. In eBrief No. 12/12 Revenue set out the capital allowances allowable as a deduction from income and the non-deductible capital allowances as well as the relevant sections of the 2011 Form 11 for returning details of the different capital allowances.

Briefly, capital allowances incurred for trading purposes on the provision of:

• Plant and machinery;
• Vehicles used for business purposes;
• Certain types of buildings, such as factories or farm buildings;

are deductible from income for the purpose of calculating the USC. Any capital allowances due to individuals that do not actively carry on a trade are not deductible.

In addition, apart from farm buildings, capital allowances that are written off over accelerated 7-year periods are not allowed. Readers may wish to refer to appendix C of the USC FAQ for details of both deductible and non-deductible allowances in respect of the different types of buildings.

The relevant sections of the 2011 Form 11 to be completed in respect of capital allowances are set out in Revenue's eBrief No. 12/12

Revenue eBrief No. 12/12 is available on here