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What is the capital goods scheme?

The CGS is a method of adjusting the amount of input VAT recovered on certain kinds of assets which are used over a relatively long period of time. Adjustments under the CGS reflect changes in how the assets are ‘used’ over time.

The assets covered by the scheme are often referred to as ‘capital items’. Not all capital expenditure gives rise to capital items. In fact, the CGS covers a relatively limited range of assets which exceed certain value thresholds. In broad terms, the kinds of assets covered are:

1. •

   land and buildings costing £250,000 or more (excluding