Capital goods scheme (CGS) ― overview

Produced by a Tolley Value Added Tax expert

Value Added Tax

Guidance

This guidance note provides an overview of the capital goods scheme (often referred to as the CGS) along with links to further practical guidance on the subject.

In-depth commentary on the legislation and case law associated with the CGS is covered in De Voil Indirect Tax Service V3.470.

Video overviews of the CGS can be found below:

•
Capital goods scheme (Part A)
•
Capital goods scheme (Part B)

What is the capital goods scheme?

In the Spring 2025 Tax Update, the government announced that it will simplify the Capital Goods Scheme by introducing the removal of computers from the assets covered by the scheme and increasing the capital expenditure value of land, buildings and civil engineering work to £600,000 (exclusive of VAT). This simplification will reduce the number of capital assets that would fall within the Capital Goods Scheme, therefore reducing the administrative burden on small businesses. The date of implementation of this change has not yet been confirmed.

The CGS is a method of adjusting the amount of input

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