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Capital Allowances On Buildings

Capital Allowances on residential properties purchased for use as Care Home

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I have a client who currently rents a private dwelling via a limited company for use as a special needs care home. He is about to purchase the property for continued use as the care home. Is there any special circumstances surrounding capital allowances available for buidings used in the healthcare sector, or is the property just subject to the 3% capital allowance avialbale since 1/4/20.

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By timothyvogel
20th Jun 2022 09:46

hang the capital allowances and stamp duty. does he have change of use planning permission if a private dwelling? notorious local case round here of a care home that did not have change of use and very large fines and loads of hassle resulted

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By David Ex
20th Jun 2022 10:35

If you have access to the internet, worth having a look at the HMRC manuals.

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By More unearned luck
20th Jun 2022 11:23

What CA's is the landlord/vendor claiming or could claim if properly advised? Research 'integral features'.

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By Tax Dragon
20th Jun 2022 11:46

I suspect there is a firm (probably more than one) not too far from you that specialises in capital allowances on property transactions - specifically the integral features element of which a quicker-than-me respondent posted.

If the numbers are significant - and if the company hasn't itself kitted out the place and obtained CAs in relation to the expenditure - then I suggest you contact such a firm.

(Though if, as you say, "He is about to purchase the property" but it's the company operates the home, there's more of a question mark in my mind about this.)

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By Piltdown Man
21st Jun 2022 08:39

If the property being acquired has historically been used as a dwelling, then it is likely (but needs checking) that no person has previously become entitled to capital allowances on the fixtures therein. As a result, the provisions of CAA 2001 s187A probably do not apply and you will be free to apportion the purchase price to P&M fixtures (perhaps in addition to any separately acquired chattels - although these may have been scrapped due to the change of use).

Structures and Buildings Allowances (the 3% allowances I believe that you are referring to) are passed from Seller to Buyer if Seller can provide an allowance statement (which in this case they are unlikely to be able to do as the property is (and probably always has been) a dwelling); or if the Seller was a developer which built the property as part of its trading stock and sold it before first use (again not the situation here).

My view is that it is either P&M or nothing in your situation.

In the last claim I prepared for a similar purchase (although in that case the dwelling was purchased to become an architect's office not a care facility), the P&M fixtures represented approximately 22% of the purchase price.

If you assume that 20% P&M is likely to be available, that would be a reasonable estimation, you can work out what may be at stake.

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