Capital Allowances Calculator Kenya 2026

Depreciation is not deductible; capital allowances are

When a business buys equipment, a vehicle or a building, it cannot deduct the whole cost as an expense in one go, and the depreciation charged in the accounts is not allowed for tax. Instead, the Income Tax Act gives its own deduction, called an investment allowance (commonly still called a capital allowance), which spreads the cost over several years at fixed rates. Landlords and companies use it to reduce their taxable profit.

How the rates work

The Second Schedule to the Income Tax Act lists each type of asset with its rate. The allowance is a straight-line share of the cost, not a share of a reducing balance:

• Motor vehicles, heavy earth-moving equipment, computers, software, copiers and calculators: 25% of cost a year, so the cost is written off over four years.
• Furniture and fittings, telecommunications equipment and other machinery: 10% of cost a year.
• Commercial, industrial and educational buildings: 10% of cost a year in equal instalments. Land never qualifies.
• Machinery used for manufacture, hospital equipment, ships and aircraft, buildings used for manufacture, hotels and hospitals, and farm works: 50% of the cost in the first year of use, then 25% a year of the remainder in equal instalments.

Large qualifying investments can claim 100% in the first year; see the investment deduction calculator. Putting an asset in the right group matters. If you are unsure, check the schedule or ask a tax adviser. Restrictions can apply to assets used partly for private purposes.

What the calculator does

You choose the type of asset, enter its cost and say which year of use you want to calculate, where 1 is the year it was first used. The calculator shows the allowance for that year, the total claimed so far, the cost still to deduct, and the tax saved at the rate you choose, with 30% as a default for a company.

A worked example

A computer costing KES 1,000,000 earns an allowance of KES 250,000.00 in each of its first four years, saving KES 75,000.00 in tax a year at 30%. Machinery used for manufacture costing the same earns KES 500,000.00 in its first year.

Why records matter

Capital allowances depend on a register of assets, with the cost, date and type of each. Without it, you cannot show what has been claimed, and KRA may disallow the claim. Keep invoices, import documents and sale agreements. If you sell an asset for more than its remaining value, the excess is a taxable trading receipt, and a shortfall is a trading loss.

Landlords and capital allowances

Residential landlords taxed under Monthly Rental Income tax cannot claim capital allowances, because MRI is charged on gross rent. Landlords on the annual route can claim allowances on qualifying equipment, such as furniture and fittings in a furnished let, and on qualifying buildings. The rental income calculator has a box for capital allowances.

Limits

The rates were checked against the Income Tax Act as at 1 July 2026. Individual lines have been amended in several recent Finance Acts, so an earlier year may follow a different rate, and periods before 2021 followed the older wear and tear classes, which this calculator no longer models. The result is an estimate for information only, not tax advice.

Disposals

Selling or scrapping an asset ends its allowances. The law works out the remaining value after the allowances already claimed and compares it with the sale proceeds. Tell your accountant about every disposal, and keep the sale invoice and the register entry.

Planning a purchase

Because the allowance depends on the type of asset, the same spending can produce very different tax savings in the first year. A delivery van bought for KES 3,000,000 saves tax on one quarter of its cost each year, while machinery used directly in manufacturing can save tax on half of its cost in the first year. Before you buy, ask what the asset will be used for, because use decides the group. A building used as a shop is commercial, a building used for manufacturing is not, and the rates differ.

When you can choose the date of purchase, remember that the first year of use starts when the asset is ready for use in the business, not when you pay. An asset bought and used in the last month of your financial year still starts its schedule, so timing a purchase before year end can bring the first deduction forward by twelve months.

Keeping the register

For each asset, record what it is, the supplier and invoice number, the cost, the date it came into use, the group and the allowances claimed each year. Add the sale date and proceeds if you dispose of it. With a register, your accountant can fill the tax computation quickly and you can answer a KRA query without searching for old invoices. The fixed asset register template on this site tracks depreciation for the books and an estimate of the tax allowance side by side.

Guides, tools and templates for this topic

Read next: Capital allowances are now straight-line: what changed and what it means, Fixed assets and capital allowances explained for small businesses, Deductible expenses for landlords: what you can claim and what you cannot

Related calculators: Corporation Tax Calculator, Investment Deduction Calculator, Rental Income Tax Calculator

Excel templates: Depreciation schedule workbook, Fixed asset register with depreciation and capital allowances

More in the blog and the template shop, or ask for a custom template.