Capital Allowances for Hotels: Guest Rooms, Kitchens and Plant

Capital allowances for hotels cover the qualifying capital spend inside a trading hotel that can be deducted from taxable profit: fitted bedroom joinery, sanitary fittings, air conditioning, commercial kitchen and laundry equipment, lifts, fire alarms and security systems, and the building's electrical and water installations.

Hotel spend splits three ways for tax:

• Plant and machinery inside the building, written down at the main rate or deducted in full under a first-year allowance
• Integral features, the building services that sit in the slower special rate pool
• The structure itself, which attracts the capital allowances available under the structures and buildings allowance

This guide walks a hotel area by area and states the rate attaching to each item, covering capital allowances on hotel buildings bought second hand as well as capital allowances on hotel refurbishment.

Why a Hotel Holds More Qualifying Spend Than Most Buildings

An office holds desks, partitions and a lift. A hotel holds all of that plus a bedroom's worth of fitted joinery, sanitaryware and controls repeated across every room, a commercial kitchen, a laundry, and building services running continuously.

That density is the argument for capital allowances for hotels. The spend is not one large item; it is hundreds of moderate ones, which is why it goes unanalysed. Fit-out invoices arrive as lump sums against a room count, and nothing in that document tells an accountant which line is plant and which is building.

Capital Allowance Review Service reports a Central London bar that grew into a 21-room hotel, spending £580,000 on leasehold improvements in 2014, where a later review identified £160,000 of qualifying allowances, 28% of the total (Capital Allowance Review Service, propertycapitalallowance.com, 23 October 2025). That is the firm's own case study rather than a benchmark, but it shows what an unanalysed fit-out can contain.

Guest Bedrooms: What Qualifies Inside the Room

The bedroom is where an embedded capital allowances claim finds the most repeated value: whatever qualifies in one room qualifies in every room.

Item in the room	What it is for tax	Pool
Fitted wardrobes, headboard and bedside joinery	Fixture, plant	Main pool
Free-standing furniture, mini-bar, television	Loose plant	Main pool
In-room safe	Fixture, plant	Main pool
Carpets, curtains and blinds	Plant	Main pool
Shower enclosure, sanitary fittings, mirrors	Fixture, plant	Main pool
Room-entry locking and lighting-control systems	Fixture, plant	Main pool
Air-conditioning terminal unit	Integral feature	Special rate pool
Lighting circuit, hot and cold water, space heating serving the room	Integral feature	Special rate pool

Fitted joinery is the item operators most often assume is part of the building. It is not. A fitted wardrobe installed to serve the trade of letting the room functions as plant, and so do the headboard run and the bedside units built with it.

The bathroom splits. Sanitaryware, the shower enclosure and the fittings are plant; the tiling and walls behind them are not, and the water installation feeding them is an integral feature at the slower rate.

A care setting divides the same room differently, because hoists, assisted bathing and nurse call drive the fit-out. That position is covered in Capital Allowances for Care Homes: Claiming on Bedrooms, Bathrooms and Plant.

Back of House: Kitchens, Laundry and Plant Rooms

Back of house is where the largest single items sit, and where the capital allowances special rate pool starts to matter.

Main pool plant:

• Commercial kitchen equipment, the extraction canopy and its ductwork
• Cold rooms, walk-in refrigeration and ice plant
• Laundry plant: washers, dryers, calenders and presses
• Fire alarm and detection systems, CCTV and access control
• Pool filtration and circulation plant, saunas, steam rooms and gym equipment

Special rate plant:

• Boilers, calorifiers and the space and water heating installation
• Goods lifts and passenger lifts
• The general electrical and lighting installation, including standby power where it forms part of that installation

The commercial kitchen and extraction are treated here as part of the hotel's own claim. The catering plant and front-of-house bar position in its own right is covered in Capital Allowances for Pubs, Restaurants and Commercial Kitchens.

A swimming pool illustrates the boundary well. The filtration, heating, dosing and circulation plant qualifies. The excavated tank and its structure are part of the building and do not, though they may fall to the structures and buildings allowance instead.

Refurbishing Rooms and Public Areas

Capital allowances hotel refurbishment starts with a question that comes before the pools: is the spend a repair or is it capital?

A like-for-like carpet replacement across a floor of bedrooms is a repair, deductible in full against profit in the year. A strip-out and full re-fit of those rooms is capital, and it then splits between plant, integral features and building. Both outcomes are useful; they reach the deduction by different routes. The general repairs-versus-capital test is covered in Which Refurbishment Costs Qualify for Capital Allowances?

Inside a capital refurbishment, have the joinery, the sanitaryware, the furniture, the lighting and power alteration and the mechanical services priced separately. The plaster, screed, decoration and structural alteration will not qualify as plant, and a contractor who issues one figure for the room makes that split impossible after the fact.

An operator refurbishing premises they do not own should establish whose spend it is before works start. A tenant claims on their own fit-out; the landlord's building sits elsewhere. That division is covered in Can You Claim Capital Allowances on a Leased or Rented Property?

Buying an Existing Hotel: the Fixtures Already in the Building

A second-hand hotel arrives with fixtures already installed, and the allowances on them are not automatic. Their value has to be settled between seller and buyer before completion, and where that is not done the buyer can lose the position entirely.

Two questions decide it. Did the seller pool the fixtures, and has a value been fixed between the parties? A hotel bought without either point resolved may hold significant embedded value that nobody can now claim. The pre-completion negotiation and the election mechanics are covered in Capital Allowances When Buying a Commercial Property: What to Agree Before Completion.

Historic spend is a separate matter. A hotel bought or fitted out years ago whose expenditure was never analysed may still hold an unclaimed position, because unclaimed plant and machinery expenditure does not expire the way a filing deadline does. How far back that can be reopened is covered in Can You Still Claim Capital Allowances on a Building You Bought Years Ago?

The Shell Itself: Structures and Buildings Allowance

Capital allowances structures and buildings cover the part of a hotel that is not plant: the walls, floors, roof, and the construction and fit-out costs that form the fabric.

The allowance is 3% a year on qualifying construction costs, on a straight-line basis (GOV.UK, "Claiming capital allowances for structures and buildings", last updated 3 September 2020). Two conditions matter for a hotel. The construction contract must have been entered into on or after 29 October 2018, and the structure must be used for a qualifying activity and not as a residence. A trading hotel letting rooms to guests meets the qualifying-activity test.

The allowance is slow, and it is not an alternative to a plant claim on the same cost. Spend claimed as plant is not also claimed under the structures and buildings allowance.

How Full Expensing Applies to New Hotel Plant

A hotel held in a company can deduct 100% of the cost of new and unused main-rate plant in the year of purchase under full expensing, with a 50% first-year allowance for new special-rate expenditure such as heating and lighting installations (GOV.UK, "Claim capital allowances: Full expensing and 50% first-year allowance", accessed August 2026). Capital allowances full expensing is restricted to companies and to assets bought new; second-hand kitchen plant and used lift equipment fall outside it.

For a hotel replacing a kitchen or a laundry with new equipment, this is usually the fastest route to the deduction. Sole traders and partnerships cannot use it, which makes the ownership structure of the hotel a live question before the invoice is raised.

Where the Annual Investment Allowance Fits

The annual investment allowance gives 100% relief on up to £1 million of qualifying plant and machinery in the period, and it is open to companies, sole traders and partnerships alike (GOV.UK, "Claim capital allowances", accessed August 2026). For a hotel held personally or in partnership, the capital allowances AIA limit is the main route to an immediate deduction.

Since 1 January 2026 a further option sits alongside both. A 40% first-year allowance applies to main-rate plant and machinery where the annual investment allowance or an existing first-year allowance such as full expensing is unavailable or not preferred, and unlike full expensing it is open to unincorporated businesses (GOV.UK, "Capital allowances: new first-year allowance and reducing main rate writing-down allowances", 26 November 2025). Second-hand assets and cars are excluded.

Writing Down Allowance Rates and the April 2026 Change

Where spend is not relieved in full in the year, it enters a pool and is written down annually. The capital allowances WDA rates changed this year, and most hotel guidance online still gives the old figure.

Pool	Rate	Typical hotel items
Main pool	14% from April 2026 (18% before)	Kitchen and laundry plant, fitted joinery, carpets, fire alarms, CCTV
Special rate pool	6%	Lifts, heating, air conditioning, water systems, electrical and lighting installations
Structures and buildings allowance	3% straight line	The shell and fabric

The main pool rate fell from 18% to 14% on 1 April 2026 for Corporation Tax and 6 April 2026 for Income Tax, while the special rate pool stays at 6% (GOV.UK, "Capital allowances: new first-year allowance and reducing main rate writing-down allowances", 26 November 2025). An accounting period straddling that date applies a hybrid rate based on the proportion falling either side of it.

The special rate pool matters in a hotel because so much of a hotel is building services. HMRC's integral features list covers lifts, escalators and moving walkways, space and water heating, air conditioning and air cooling, hot and cold water systems, electrical and lighting systems, and external solar shading. The borderline cases are covered in What Counts as an Integral Feature for Capital Allowances?

Solar Panels, Heat Pumps and EV Charging at a Hotel

Capital allowances solar panels sit in the special rate pool at 6%, as do heat pumps and their installation, because both form part of the building's services rather than loose plant. Where the equipment is new and unused and the hotel is held in a company, the 50% first-year allowance applies instead in the year of purchase.

Electric vehicle charge points are treated differently. A 100% first-year allowance applies to qualifying expenditure on plant or machinery for electric vehicle charge points, extended to 31 March 2027 for Corporation Tax and 5 April 2027 for Income Tax (GOV.UK, "Capital allowances: extension of first-year allowances for zero-emission cars and electric vehicle charge-points", 26 November 2025). For a hotel installing guest charging bays, the full cost comes off profit in the year of the spend.

What to Do Next

Walk the property first. List what exists in a standard bedroom, in the public areas and in the plant rooms, with the year each item was installed and the invoice it appears on.

An online estimate is not entitlement. An estimator applies a percentage to a purchase price; it cannot know whether the fixtures were pooled by a previous owner, whether a value was fixed on the last sale, or whether they sit with a landlord. The figure is a reason to investigate, not a claim.

Run the property through the capital allowances estimator to put a figure against the hotel before approaching an adviser.