I have the situation where a "qualifying hotel" is owned personally by the directors and used by their own ltd co as a hotel. The co pays them rent and they claim mortgage interest relief against that income. Can they also claim IBA's personally to offset against the rental income as well?
Any comments would be appreciated.
Rob
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Don't Forget Plant & Machinery Allowances!
Your clients are effectively property investors in owning the hotel. In addition to the IBA (hotel) Allowances (assuming the relevant criteria and dates are met under CAA2001) they should also be entitled to plant & machinery allowances in respect to the original purchase. The quantum of allowances will vary depending upon the hotel specification and 'star rating', but can range from 20% through to 45% or so if gymnasia or swimming pools are also included.
Obviously there are other legislative criteria that may deminish or remove the benefit of capital allowances depending on the property, its prior ownership and associated tax history.
If you wish to explore further we would be pleased to assist as we are property taxation specialists and have undertaken capital allowances reviews on many hotels across the UK.