Who qualifies for capital allowances relief?

If you are a UK taxpayer and own a commercial property, then there is a very good chance you will be due a sizeable tax benefit because of unused capital allowances.

What can I claim for?

Your accountant will claim for you on everyday purchases such as curtains, computers, fire extinguishers, tables and chairs.

However, the majority of accountants will not have the necessary skillset required to form a ‘just and reasonable’ apportionment of a property’s cost and place values on the qualifying plant within. Such items include electrics, air conditioning, heating systems, lighting, plumbing and sanitary installations.

We, on the other hand, draw on a far more detailed understanding of capital allowances legislation and carry out a detailed on-site survey of the property in question.

We will work with you and your accountant to make sure that absolutely every opportunity for capital allowances tax relief has been identified and claimed for.

What is HMRC’s role?

HM Revenue & Customs created capital allowances legislation to encourage more commercial property investment by individuals and companies.

We would not generally request any information from HMRC to process your claim, and generally find that the required information is more readily available from our clients and their advisors.

Our report has been specifically formatted for HMRC purposes and we believe that this has a large part to play in the fact that historically less than 1% of our cases that have been submitted to HMRC have generated the need for a further enquiry.

Nevertheless, routine enquiries into a capital allowances submission will occur from time to time. In such circumstances, we will answer any queries raised by HMRC and provide all the necessary supporting information and documentation in order to satisfactorily substantiate the claim as we have the expertise and are quite happy to provide this service under the terms of the contract.

Will this affect my capital gains tax or reduce the value of my property?

Not at all. The introduction of capital allowances will not affect the base cost for capital gains tax purposes.

There is a distinction to be drawn between the moveable furniture & equipment (fixtures & fittings) which are separate items to the building and embedded plant & machinery which is fixed to the building. The embedded plant is not removed from the building and therefore not allocated separately in the accounts. The introduction of the capital allowances into the pool(s) is therefore a tax concern and not an accounting consideration. The accounts are not amended; the only change is to the respective pool(s) where the plant & machinery allowances are introduced.

I bought my property 10 years ago. Can I still claim?

Yes, absolutely. We routinely process claims for expenditure incurred 10 years ago or even earlier. The claim can be submitted into the earliest tax return which remains open for amendment under self-assessment rules. Doing so can often result in a rebate of overpaid tax.

It sounds too good to be true. There must be some hidden costs?

There are absolutely no upfront costs. Our fee will only become due once we have completed our work and produced a Capital Allowances Valuation Report that identifies a worthwhile claim.

We work on a ‘no claim, no fee’ basis as we feel it is the fairest way to work with our clients, and have minimum claim thresholds in place. Should we discover that no claim is available, we will close our file and a fee will not be due, regardless of the work undertaken up to that point.

My accountant already deals with our capital allowances. Isn’t this something they should have done already?

Most accountants provide some form of capital allowances advice. However, capital allowances claims are ideally suited to being dealt with on a standalone basis separately to other tax matters.

As capital allowances specialists we possess a specific skillset with a more detailed and up-to-date understanding of capital allowances than most advisors, who deal with this area of taxation less frequently.

We are consistently able to identify tax savings which have previously been overlooked by clients and their advisors.

Working alongside your accountants will ensure a positive outcome. Indeed, your accountant will sign off our work before it is submitted to HMRC.

I don’t have sufficient taxable profits to benefit from capital allowances. Should I bother with them?

Yes. In our experience, it can still be worthwhile identifying capital allowances, particularly if a taxable profit is expected in the near future.

There are situations in which capital allowances do not yield an immediate return. However, they can sometimes be used to offset capital gains tax liabilities, surrendered to group companies, passed on to new owners and more. Ultimately each set of circumstances is different and we would always recommend getting in touch so that we can carry out an appraisal and provide advice.

Use our calculator to find out how much Capital Allowances tax relief you are entitled to

Property Type

Purchase cost

Cost of improvements

Ownership

Tax Rate on Profits

Estimated Capital Allowances identified

Tax saving & cheque back

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