cap allowances on rented prop additions

cap allowances on rented prop additions

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My client is a limited company who has leased a building from which she trades as a beauty treatment centre. She has installed sinks, basins lighting and suspended ceilings. Am i right in thinking that as these will be the landlands property when she eventually leave, that she can claim capital allowances. Would it make any difference if she had to return the bulding to its original state on leaving.
Any help with this would be gratefully appreciated
Peter Walker

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By E3Consulting
19th Feb 2007 13:15

Plant & Machinery Allowances & FYAs too?
As Abacus points out, capital allowances are in deed available. It is very common for tenants to believe they are not entitled to allowances in respect of their expenditure - but the basic tenents are that if you have an interest in land, incur the cost and the assets belong to you - you can make a claim.

The full range of assets eligible for plant and machinery allowances (PMAs) will vary depending upon the specific use within your client's trade. Suspended ceilings can qualify - for example if they form part of the air conditioning system - what's called a "plenum ceiling". Lighting also can be mixed - some being eligible, whilst others are not qualifying.

As a Property Taxation Specialist - we undertake many such capital allowances reviews for client across the country to ensure the tax savings available or being truly optimised. Our experience for such a retail/health business would be that between 15%-35% of the expenditure should qualify as PMAs. Obviously the nature of the business and their expenditure will affect where you client sits within such a range, however we would be pleased to hear from you if you wished to understand more about our property taxation services.

Claiming the allownaces could significantly benefit your client as such businesses are typically within the SME categorisation and so should also benefit from accelerated relief via the 'First Year Allowances' at 40% or 50% depending on the dates of expenditure and business size. Additionally there are 'Enhanced Capital Allowances' on certain 'energy efficiency' and 'water conversation' assets, which may again move the expenditure out of PMAs @25% p.a. wda across to 100% FYAs!

Visit our website for further details www.e3consulting.co.uk

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By User deleted
16th Feb 2007 12:50

Most of us need help on this subject !
Even without a lease complicating matters, I commence by saying you are somewhat optimistic about the elegibilty for CA's. I' ll certainly give you sinks but "basins lighting" is very problematic unless it is , as they say, adding to the ambience of the salon . Ultra-special coloured spots or similar ? One doubts it. As for suspended ceilings, you will earn yourself a big name if you obtain allowances on this one.
The fact that fixtures will eventually revert to the landlord is not a pre-requisite : there is a valid claim because your client had a "relevant interest" in the premises (a lease) at the time the expenditure was incurred. Do have a look at Manual para CA26700 regarding disposal value when the lease expires. If no compensation offered , your client has a nil disposal value and , unless something is received from a scrap merchant or the like, the same would apply if all the lessee's fixtures had to be ripped out .

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