Property Capital Allowances Explained

Capital Allowances Explained

A Capital Allowance is a taxable benefit against expenditure on Property Plant and Machinery (for the purpose of the trade) that is often overlooked and undervalued by many commercial property owners.  The tax savings from this additional layer embedded within a commercial property is significant and a small example includes lifts, fire escapes, heating, lighting, wiring and security systems etc., albeit the list of capital allowances is vast!

The ability to submit a claim for Property Capital Allowances is available for historic qualifying expenditure for claimable items that are still a fixture within the property.  The tax benefit of these claimable items will, however, remain hidden until the Accountant, owner or leaseholder instigates the process of identification.

Good Accountants will have an established routine for assessing Capital Allowances, however, the experts at Capital Allowance Review Service take the search to a whole new level!  The key difference offered to add value to the work of a good but non-specialist Accountant is a visit to the property to identify these items that are not visible on the paperwork.

Examples of why:

  • property acquisitions can include inventory’s for moveable items only, however, details of the property fixtures & features are often not provided therefore are not claimed. The days of taking a % of the property cost can no longer be applied.

  • the invoices for property improvements/alternations are too vague i.e. stage payments or contractor descriptions only with no breakdown provided. Therefore items that qualify cannot be seen by typical accounting routines.

  • complex legislation applied to a vast array of property equipment/installations now makes it tricky to determine what qualifies, and what doesn’t. Most prefer not to take the risk and therefore items are not claimed.

How do I claim Capital Allowances?

Capital Allowances are claimed on your tax return and are normally claimed by 12 months after the return deadline. However, a claim is not restricted to this time frame and a retrospective claim (highlighting historical costs) can be completed years after the spend took place.

What are the Capital Allowance rates for Plant and Machinery?

The ‘normal’ allowance is a writing down allowance (WDA) of 18%, or a special pool writing down allowance of 8%. But there is currently a much more beneficial allowance available, the annual investment allowance.

What is the AIA and ECA?

The annual investment allowance (AIA) provides 100% tax relief on assets qualifying as plant and machinery, subject to an annual maximum and excluding cars. There are special allowances for energy efficient or environmentally beneficial plant and machinery. These Enhanced Capital Allowances (ECA) also attract 100% tax relief and are in addition to AIA.


About Capital Allowance Review Service

Capital Allowance Review Service is seen as a Premium Provider in the marketplace due to the experience, technical knowledge and approach to each case.  We have been awarded the Best Property Capital Allowance Firm & Excellence Award for SME R&D Tax Relief in the UK!  This success is a result of having the right technical knowledge in the various required disciplines and with the relevant experience, we are able to reach the highest level of due diligence, that allows us to unlock funds which Clients did not know they had.

Where can I find more information about Capital Allowances?

HMRC’s helpsheet HS222 gives further information about capital allowances and there is further information on here.

We always recommend you seek advice from a suitably qualified adviser before taking any action.  Getting the right advice is crucial in satisfying new legislation and securing tax savings for you and your business.

For information about how the experts at Capital Allowance Review Service can help you to add value and maximise the tax benefits available to your client, please CONTACT US for your complimentary review.