Qualifying Capital Expenditure in Nigeria: The Full List
Fourteen asset types, three classes. The intuitive answer is wrong more often than it's right.
Cited against the NTA 2025 Act textCapital allowance is the tax relief you get for money spent on business assets, and the mechanic is simple once you have seen it: a flat share of what the asset cost, claimed every year until there is nothing left to claim. What decides that share is which of three classes the asset falls into.
Which is where it stops being simple. The Act sets out classes of qualifying capital expenditureNTA 2025 First Sch. Pt I, para (f), and the practical question — is the thing I just bought Class 1, 2 or 3 — has an answer that runs against ordinary intuition often enough to be worth a page of its own. This is that list.
- Three classes, 14 named asset types. The class decides the annual rate — 10%, 20%, 25% of original cost, every year, until the pool is exhausted.
- Classification does not change how much relief you get. It changes how long you wait: 10 years for Class 1 against 4 for Class 3. On a large asset that is a cash flow difference, not an accounting one.
- The intuitive answer is wrong more often than it is right. Plant & Machinery is Class 2, not Class 3. Heavy Transportation is Class 1 while an ordinary Motor Vehicle is Class 3 — the heavier vehicle relieves two and a half times more slowly.
The full list
14 named asset types, the class each falls into, and the annual rate that follows from it. The third column is the Act's own expenditure heading, which is what the classification is named for — useful when what you are holding is a contract that uses statutory language rather than an invoice that uses plain English.
Class 1 — 10% a year, 10 years to exhaust
| Asset type | Statutory heading | Typically |
|---|---|---|
| Building (Industrial & Non Industrial) | Building Expenditure | Commercial, industrial and residential buildings, warehouses, factories, office blocks. |
| Heavy Transportation | Heavy Transportation Expenditure | Haulage trucks, trailers, buses, commercial fleets operated for hire. |
| Communication Infrastructure | Mast Expenditure | Masts, towers, base stations, transmission equipment. |
| Agricultural Expenditure | Agricultural Expenditure | Farmland development, plantations, irrigation works — equipment is classified separately. |
| Intangible Assets | Intangible Assets Expenditure | Patents, trademarks, copyrights, licences, franchises. |
Class 2 — 20% a year, 5 years to exhaust
| Asset type | Statutory heading | Typically |
|---|---|---|
| Furniture & Fittings | Furniture and Fittings Expenditure | Desks, chairs, cabinets, shelving, partitions. |
| Plant & Machinery | Plant Expenditure | Manufacturing, processing and production equipment. |
| Plant & Machinery (Agriculture) | Agricultural Equipment Expenditure | Tractors, harvesters, ploughs, irrigation systems. |
| Mining Assets | Mining Expenditure | Drilling rigs, excavators, crushers, conveyors. |
| Office Equipment | Other Equipment Expenditure | Printers, photocopiers, scanners, telephones. |
| Computer Equipment | Other Equipment Expenditure | Desktops, laptops, servers, networking hardware — hardware only, software is separate. |
Class 3 — 25% a year, 4 years to exhaust
| Asset type | Statutory heading | Typically |
|---|---|---|
| Motor Vehicle | Motor Vehicle Expenditure | Cars, vans and trucks used for business transport. |
| Software | Software Expenditure | Purchased software, licences, capitalised development costs. |
| Other Capital Expenditure | Other Capital Expenditure | Qualifying capital expenditure that fits no other class. |
Class 2 is the largest group at 6 of the 14, and Other Capital Expenditure at the bottom of Class 3 is the statutory catch-all: anything capital that fits no heading above lands there at 25%. That is worth knowing in both directions — it means nothing capital is left without relief, and it means an asset parked in the catch-all because nobody looked properly is getting the fastest rate on the table, which is the error least likely to be volunteered by the person who made it.
Six pairs that catch people out
These are not edge cases. Each one is a pair of assets a reasonable person would expect to be treated alike, or in the opposite order to how they actually are, on the same ₦5,000,000 of spend.
The bigger vehicle relieves more slowly
Both are vehicles, and the heavier one takes two and a half times as long to relieve. Size and cost are not what the classes track — Heavy Transportation is its own statutory heading in Class 1, while an ordinary company car sits in Class 3. Reading across from 'it's a vehicle' gets this backwards every time.
Relief is a flat share of original cost every year until the pool is exhausted — no initial allowance, no front-loading. So the class does not change how much relief you eventually get; it changes how long you wait for it, which is the part that shows up in a cash flow.
What the class actually changes
Not the total. Relief is a flat share of original cost with no initial allowance and no front-loading, so every class eventually relieves the whole of the qualifying expenditure. What changes is the number of years you wait for it — 10 against 5 against 4.
That is a cash flow question rather than an accounting one, and it compounds in two places people do not always connect to classification. A misclassified asset distorts every year's tax computation until its pool runs out, which for Class 1 is a decade. And because a disposal takes the asset out of the pool at its residue — cost less the relief actually claimed — a wrong class also produces the wrong residue on the way out, which flows into the chargeable gain. Both are covered in the practical guide to the Act.
What isn't qualifying capital expenditure
The list above is what qualifies. Three things routinely get put on it that shouldn't be:
- Repairs and maintenance. Restoring an asset to its previous condition is a running cost, deducted in the year. Improving it beyond that condition — extending its life or its capability — is capital, and joins the relevant pool. The line is whether you have restored something or enlarged it.
- Anything not actually in use for the business. Capital allowance attaches to expenditure on assets used for the trade. Something bought and sitting uninstalled is not yet doing the job the relief exists for.
- Revenue spend that merely feels like an investment. Training, marketing campaigns, and the research half of R&D are deductions, not capital allowance — see below.
R&D: the split that decides the treatment
R&D is the one area where the same budget line can go two entirely different ways, and the test is whether an asset came into existence. Where it did — patents, licences, secret formulas, process information, discovery and testing costs — the spend is qualifying capital expenditure under the intangible assets headingNTA 2025 First Sch. Pt I, para (f), which puts it in Class 1 at 10%. Where it did not, it is a deduction under s.165, capped at 5% of turnover with no carry-forwardNTA 2025 s.165.
Routing the second half into capital allowance is a real and common error, and it is expensive in a way that is easy to miss: relief that should have been taken in full this year gets spread over ten instead.
This is not your depreciation schedule
Worth stating plainly, because the two are so often kept in one column: book depreciation and capital allowance answer different questions and produce different numbers. Depreciation is an accounting policy — your estimate of how an asset's value is consumed. Capital allowance is a statutory rate that does not care about your estimate.
The gap is not theoretical. Of the 14 classifications, the default book depreciation rate Core Ledger suggests differs from the tax rate on 8 of them:
| Asset type | Capital allowance | Default book depreciation |
|---|---|---|
| Building (Industrial & Non Industrial) | 10% | 20% |
| Heavy Transportation | 10% | 25% |
| Office Equipment | 20% | 35% |
| Communication Infrastructure | 10% | 10% |
| Software | 25% | 35% |
A building writes down over five years in the books and ten for tax. Office equipment runs the other way. Communication infrastructure happens to agree at 10% — one of only two that do. None of these book rates are set by the Act; they are the product's sensible defaults and yours to change. The tax column is not yours to change, which is exactly why the two have to be tracked separately rather than reconciled once a year.
Book depreciation is a view you take. Capital allowance is a rate you are given. Keeping them in one column means being wrong about one of them.
Classifying an asset, in order
Ask first whether it is capital at all. Restoring is a cost; enlarging is capital. Getting this wrong is more expensive than getting the class wrong.
Name the asset for what it physically is, then find that name in the list above — don't reason from the class. “It's heavy machinery so it must be the top rate” is the exact inference that produces the two errors flagged above.
Split mixed invoices before you create the asset. Hardware and software, land and equipment, building and fittings — each half belongs in a different pool, and the split is far harder once a single asset record exists.
Check the statutory heading, not just the plain-English name, when the contract uses the Act's language. Communication Infrastructure sits under “Mast Expenditure”; Office and Computer Equipment share “Other Equipment Expenditure”.
Treat “Other Capital Expenditure” as a last resort, not a default. It is the fastest rate on the table, so it is the one an assessment is most likely to question.
Record the book depreciation rate separately from the tax class, and expect them to disagree. On most of this list they do.
Everything above is general information about published rules, not advice about a particular asset. The classifications and rates are the same reference set Core Ledger's capital allowance engine computes against, and the tables on this page are rendered from it rather than typed in — but classification is a judgement about a specific purchase, and the ones worth getting right, including R&D equipment, are worth asking a professional about.
The Core Ledger team tracks Nigerian tax legislation so the platform's compliance tooling — and this blog — stay current with it.