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Capital allowances on fixtures and integral features

Capital allowances on fixtures and integral...

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I freely admit, my head's in a spin after reading around the subject and I would appreciate a pointer in the right direction.

Client (buyer) bought a holiday letting property in summer 2013.  This property had never qualified as a furnished holiday let (FHL) for the seller, so no capital allowances (CAs) were (or could have been) claimed by the immediate previous owner who had owned the property for some 5 years.

Client acquired the property, together with holiday bookings and, within 12 months, demonstrated that they had a qualifying FHL  -  from the very second they acquired the property.

Can client claim CAs for purchased integral features and fixtures?  If they don't claim and could have, I understand they now risk no future owner ever being able to claim.  What procedures must they follow; what traps await?

As S 198 elections and Tribunal fixed values do not apply (because seller did not have a business eligible for CAs):

  • do they need to obtain a statement from sellers that they did not claim CAs
  • do they need to go back in time check that no previous owner ever claimed CAs or otherwise establish fixed value?
  • should they not even risk a lowish 10% (under) claim without obtaining expert capital allowances surveyor valuation?

 Thank you so much if you know and can comment helpfully.


Replies (11)

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By plummy1
02nd Nov 2014 18:24

I hope this helps.

Dear Jim H.

Firstly can I declare a professional interest as I own Curtis Plumstone a Capital Allowances Claims company so I'll state up front that if  we can be of assistance with an estimate for the claim I'd be happy to oblige. Having got the sales pitch out of the way the answer to your questions are:-

Your client purchased the property in 2013. As the previous owner was not eligible to claim capital allowances then the "Fixed Value" requirement introduced in April 2012 does not need to be met i.e. no need for a S198 election agreement. The "Pooling Requirement" was not introduced until April 2014 so does not effect this purchase. In essence your client's case falls under the old rules pre April 2012.

It sounds unlikely that the property has previously been subject to a capital allowances claim for fixtures in the past although any competent  capital allowances claims company will endeavour to trace the properties history back to June 1996 to prove this point and fully document the evidence.

With the majority of capital allowances claims on FHL's, our experience shows, a claim for fixtures/integral features will be somewhere between 20% to 30% of the original purchase cost of the property. Therefore I would suggest that before putting in a low estimate of 10% you obtain a fee estimate from a competent capital allowances claims company to see whether there could be a real benefit in employing such a specialist.

If I can be of further assistance then please pm me or e-mail [email protected]

Kind regards John 





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By JimH
03rd Nov 2014 15:48

Connected parties rules

Thank you @John.  I now have some further information:  my client bought from a close family member, so is blocked from making an integral features Capital Allowance claim.  Any claim for capital allowances is restricted to writing down allowances on plant & machinery, which I believe historically included baths, boilers, radiators, cupboards etc unless boilers and radiators became subsumed into the integral features legislation?

Boilers and radiators were eligible for standard plant & machinery capital allowances.  Whilst boilers and radiators sound like heating systems, therefore integral features, can pre-2008 boilers and radiators be included in the main pool rather than classed as integrated features?

I am confused if all "list C" still stands for standard plant & machinery allowances or elements were replaced in April 2008 when integral features came in.


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By plummy1
03rd Nov 2014 21:18


Dear Jim,

Could I ask when you say they were closely related what the actual relationship is? Just want to check that the connected party rules do apply.

If the connected party rules do apply then you may well be restricted to the cost that the close relation paid for the property and therefore the qualifying fixtures. However I don't see that this would restrict your client from claiming for the fixtures including integral features as they purchased in 2013? Unless I am missing something here.

The main changes that were introduced by integral features were cold water systems and that electrical systems didn't have to be connected to a qualifying piece of plant so things like general lighting were then claimable. Heating systems were claimable before integral features so all the integral features legislation did was to say where the expense was incurred from April 2008 onwards then it had to be classified as Special Rates Pool expenditure rather Main Pool expenditure. 

I hope this makes sense.




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By JimH
03rd Nov 2014 23:34

Lineal relatives s575 CAA 2001
So a second hand radiator or boiler, pre-dating 2008 and acquired with a 2013 purchase, can have main pool plant & machinery WDAs at 18% because they were always plant?

Unfortunately, lineal relatives are caught by FA 2008 sch 26 para 15, so cannot claim allowances for integral features purchased by their relatives before 2008:

"Sale between connected persons

15(1)This paragraph applies where, on or after the relevant date—
(a)there is a sale of a pre-commencement integral feature,

(b)the buyer and seller are connected persons (within the meaning of section 575 of CAA 2001), and

(c)the buyer's expenditure on the integral feature would (apart from this paragraph) be special rate expenditure.

(2)An integral feature is a pre-commencement integral feature if the seller—

(a)incurred expenditure on it before the relevant date, or

(b)incurred expenditure on it on or after that date which was not qualifying expenditure because of a previous application of this paragraph.

(3)The buyer's expenditure on the integral feature is not qualifying expenditure unless—

(a)the original expenditure was qualifying expenditure, or

(b)the buyer's expenditure would have been qualifying expenditure, had it been incurred at the time the original expenditure was incurred.

(4)The “original expenditure”—

(a)where the integral feature is a pre-commencement integral feature because of sub-paragraph (2)(a), is the expenditure mentioned in that sub-paragraph, and

(b)otherwise, is the expenditure incurred on the integral feature before the relevant date by virtue of which this paragraph first applied.

(5)The “relevant date” has the same meaning as in paragraph 14."

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By beresfordt
05th Nov 2014 12:10

For completeness


Firstly I can confirm neither the pooling nor the fixed value agreement will apply to this transaction - as you state the seller has not qualified as an FHL (and presumably the seller hasn't used the property for any other qualifying activity).

As pointed out, it will be necessary to check whether the property has been used for a qualifying activity by any previous owner so as to ensure there are no prior restrictions set by s185 for example.

Assuming there are no such prior restrictions then the next complication with this case is the connected persons issue. These rules will deny your client the ability to claim an AIA (s217)  and, assuming the seller treated their expenditure as capital expenditure, will limit the qualifying expenditure to the lower of market value and capital expenditure incurred by the current owner (s218 - I am assuming here there was no other connected person who owned the property immediately before the current owner).

On the basis that the capital allowances on any fixtures in the property are likely to be valued on a just and reasonable apportionment basis, s218 may have no effect if the value of the property has fallen below the cost to the current owner - i.e. they are selling at a loss.

Moving next to list C the this was amended by FA 2008 with all integral features being listed separately and together at s33A (5)

Additionally,you are correct that in order to stop connected parties/group companies simply transferring all their properties and benefitting from the newly qualifying integral features, FA2008 included Sch 26 para 15 you have highlighted.

All of the above means that whilst your client will potentially, subject to the restrictions highlighted above, be entitled to make a claim for Capital Allowances on any qualifying assets they acquire (and this might include loose chattels as well as fixtures), they will need split this entitlement between assets that currently fall into either the main pool or the special rate pool.

Unfortunately all they will be entitled to claim on their qualifying expenditure will be the normal annual WDA that applies to each pool.

For any items in the main pool, and in view of the nature of their business, it may be worth looking at a Short Life Asset election - but suspect the quantum ad so overall timing benefit of this may note significant.

I hope this is helpful and happy to help any further if I can


Thanks (1)
By JimH
05th Nov 2014 20:40

Thanks Tim
I need to look at s33(A) 5 then to work out what is main pool P&M and what is Integral features. A quick search on this section reveals commentary I'd not previously found. For clarification, you are referring to a claim only for long life assets and thermal insulation in the special rate pool?

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By beresfordt
05th Nov 2014 21:46

Special Rate Pool


I'm glad to hear my comments were helpful.

With regards to assets that fall in the special rate pool this will include all integral features (as defined in s33A CAA2001), any long life assets (as denied in Part 2 Chapter 10 CAA2001) and also any thermal insulation to an existing property that is not a dwelling house (as defined in s28 CAA2001).

The rules on Special Rate Pool expenditure are set out in Chapter 10A CAA 2001 and were originally introduced by FA2008 Sch 26

Finally, anything that does not fall within the special rate pool then falls within the main pool - unless that is it is required to be pooled separately.

Does that help?


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By JimH
05th Nov 2014 22:06

Thanks for the legn references
to look at shortly. I was being pedantic, reinforcing that there will be no integral features WDAs in this case. What I really need is up to date legislation; the cost of this to all, but in particular very small practices, grieves me.

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By beresfordt
05th Nov 2014 22:56

There will be integral features
Good luck. Also just to confirm there will be integral features WDA's as any pre April 2008 qualifying assets that now fall within the definition of s33A will have to form part of the new owners special rate pool expenditure.
The connection to the seller does not allow them to continue to treat these assets as main pool item.
Does that make sense?

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By JimH
06th Nov 2014 07:37

I think I understand more clearly due to your patient explanation and a more "purposeful"reading of schedule 26 para 15. Where items never could have qualified for CAs in the sellers ownership (had they run a qualifying FHL), buyers can't now qualify through satisfying the newer integral features categories. Where items would have qualified for main pool WDAs in the hands of the sellers before 2008, but would now only attract SRAs at 8%, the buyer can claim the latter. Phew, slow, but think I got there, thanks Tim

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By beresfordt
06th Nov 2014 11:28



I confirm that's correct.I suspect I might have a sight advantage over you as CA's is what I have specialised in for the last 25 years - back when it was the 1968 Act and long before many of these new supposed experts even knew CA's existed!

If I can be of any help in the future then please don't hesitate to let me know


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