Secure more Capital Allowances to maximize Tax Relief

28th Jan 2021
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secure more capital allowances to maximise tax relief

Capital Allowances are a tax benefit against plant and machinery for the purpose of the trade and they have been around for over a hundred years – and that’s where the problems begin. They have been around for such a long time; it’s often assumed that the Capital Allowances embedded within commercial premises have already been claimed. Read on to find out how to secure more Capital Allowances to maximize Tax Relief.

In the vast majority of cases, the only way to fully maximize a claim is to undertake a detailed on-site survey of the premises to uncover the potential benefit.

Example: John Fowler Case Study

Purchase Cost: £29,000,000
Claim Achieved: £6,700,000

This is not unusual or an exaggerated example.

Capital Allowances allow commercial property owners to claim qualifying items of capital expenditure – also known as Plant & Machinery – as a tax deduction and are a valuable form of relief that can be quite substantial. But there is a problem – most don’t fully understand what constitutes P&M so when they spend money on qualifying items, they don’t realise it and so don’t have the details to pass to the accountant to claim on their behalf.

Whilst Accountants regularly and comprehensively claim Capital Allowances on moveable items, i.e., desks, chairs, computers, kitchen equipment, etc, these claims are supported by invoices provided by their clients. However, the capital allowable items (P&M) that are embedded within the property are usually overlooked as there is often no invoice and can result in claims not being done.

The main category of items missed is usually embedded in the fabric of the building and are simply taken for granted as they will have been purchased as part of a building, installed under refurbishment, or during development under stage payments, therefore the details are not clear. These items can include; nonslip floors, lift shafts, fire and security systems, communication, heating systems, sanitation, and signage. Until somebody instigates the process to highlight these unclaimed qualifying items, the only way to fulfill a claim is to undertake a full room by room survey of the property to uncover the potential and substantial benefit available to the client.

Warning! In 2014 the legislation changed with regard to Capital Allowances and if you are involved in buying or selling commercial property, it is vital that you take advice as soon as possible because incorrect actions based on inadequate understanding could result in the tax relief being lost forever.

Who can claim the benefit?

The tax benefit is available to the party that incurred the relevant expenditure or purchased the property i.e., an individual, a company, partnership, etc. How is the benefit claimed? The claim is used to generate a tax refund where possible and is used as a tax credit to reduce future tax liabilities.

More successful Case Studies

Accountancy Firm Purchase Cost: £250,000 Claim Achieved: £77,385

Serviced Offices Purchase Cost: £1,187,000 Claim Achieved: £497,310

Property Refurbishment Purchase Cost: £459,794 Claim Achieved: £309,352

Overseas Furnished Holiday Let Purchase Cost: £400,000 Claim Achieved: £116,229

Office & Warehouse Purchase Cost: £485,000 Claim Achieved: £132,039

Capital Allowance Review Service is continuing to maximize claims during lockdown 3.0.

By acting now could secure any significant tax savings! Contact us to find out if you can claim.