Without a threshold, your fixed asset register fills with chairs and cables nobody can find.
A capitalisation threshold is the minimum cost an item must have before it is recorded as a fixed asset rather than expensed. Set it at a level that keeps material assets on the register and small items off it, write it into your accounting policy with any grouping rules, and apply it consistently. Tax rules are separate and may follow their own limits.
Items costing more than the threshold, with a useful life of more than a year, are capitalised and depreciated. Items below it are expensed immediately, even if they last for years. The threshold is an accounting policy choice based on materiality: there is no single required figure in IFRS, UK GAAP or US GAAP.
Decide how to treat items bought together. Fifty laptops at 900 each are individually below a 1,000 threshold but form a 45,000 investment. Many policies capitalise groups of similar items bought for one project or fit-out when their total exceeds a higher group threshold. Write the rule down so it is applied the same way each time.
Cost includes the purchase price plus costs needed to bring the asset into use, such as delivery, installation and professional fees directly attributable to it. It excludes general overheads, training and repairs that only maintain the asset.
State the threshold, the grouping rule, the asset classes with their useful lives and depreciation methods, and who can approve exceptions. Then test it: each quarter, review expensed items just under the threshold and capitalised items just above it. See what a fixed asset register must include.
US: the IRS de minimis safe harbor election lets businesses deduct items costing up to $2,500 per invoice or item, or $5,000 if they have an applicable financial statement such as audited accounts. The election is made each year with a statement attached to the tax return, and many companies set their book threshold at the same level. UK: there is no tax-driven capitalisation threshold. Tax relief comes through capital allowances, including the £1 million Annual Investment Allowance, which applies to qualifying plant and machinery regardless of how you treat it in the accounts.
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The Fixed Assets & Depreciation System calculates straight-line and reducing-balance depreciation, stops depreciation at the disposal date with the profit or loss calculated, and ties a full movement schedule back to the register. Excel, no macros, one-time price.
Yes, as a change of accounting estimate or policy depending on your framework, applied going forward. Document why, and avoid changing it often, because frequent changes make results hard to compare.
Usually not. A subscription is an ongoing service and is expensed over the period it covers. Costs to implement or develop software may be capitalised under specific rules in each framework.
Not necessarily. The accounting threshold is a materiality choice; tax limits are set by tax law. Many US companies align them for simplicity, while UK companies follow capital allowance rules separately.
Last updated 18 October 2026. General guidance for finance teams; check it against your own policies, systems and local rules.