The HM Revenue & Customs (HMRC) published Revenue and Customs Brief 7 (2026), removing computers from the VAT Capital Goods Scheme and raising the threshold for land and buildings from GBP 250,000 to GBP 600,000, effective 29 July 2026.
The UK HM Revenue & Customs (HMRC) published Revenue and Customs Brief 7 (2026): Changes to the VAT Capital Goods Scheme on 30 July 2026, outlining changes to the assets covered under the VAT Capital Goods Scheme.
The UK tax system simplified its Capital Goods Scheme on 29 July 2026, cutting what businesses need to track when buying major assets. The changes remove one category entirely and raise the threshold for another, reducing the administrative burden on businesses that regularly invest in property or equipment.
What changed
Computers and computer equipment dropped out of the scheme completely. Businesses acquiring a server or workstation no longer adjust VAT over time — the VAT is claimed back upfront like any other purchase, removing the five-year adjustment period that previously applied to IT assets.
For land, buildings, and civil engineering works, the threshold jumped from GBP 250,000 to GBP 600,000 (excluding VAT). The scheme now only kicks in for bigger projects: a GBP 400,000 refurbishment no longer triggers the adjustment rules. The higher bar reflects a government view that many mid-sized renovation projects were being drawn into compliance obligations disproportionate to the VAT risk involved.
Aircraft, ships, and vessels saw no change, remaining in the scheme at the GBP 50,000 threshold.
What this means for existing items
Assets already owned that fell under the old scheme do not leave it just because the rules changed. Businesses keep making adjustments for the full adjustment period, even if that period starts after 29 July 2026.
The new GBP 600,000 threshold applies only to land, buildings, and works acquired, constructed, or refurbished on or after that date. Assets already held under the old GBP 250,000 limit remain covered for the remainder of their adjustment period, which can run up to ten years for property.
The changes were announced on 28 April 2025 as part of the government’s simplification drive, and particularly benefit smaller businesses managing renovation projects or tech upgrades.
Earlier, the HMRC published a policy paper on the Simplification of the Capital Goods Scheme, setting out measures to reduce the administrative burden for VAT-registered businesses on 8 July 2026.
