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What Are Enhanced Capital Allowances on Commercial Property?
Capital allowances allow businesses to deduct the cost of qualifying assets within a commercial property from their taxable profits. While most accountants will claim standard allowances on obvious items, the real opportunity lies in the embedded fixtures and fittings that are often overlooked during routine tax returns. These are sometimes referred to as enhanced capital allowances because the process of identifying them goes significantly beyond a standard claim.
For commercial property owners, the potential tax savings are substantial. A typical claim uncovered by CARS ranges from tens of thousands to hundreds of thousands of pounds in qualifying expenditure, depending on the size, age, and use of the property.
What Replaced the ECA Scheme?
Annual Investment Allowance (AIA)
The original Enhanced Capital Allowance (ECA) scheme, which provided 100% first-year relief on energy-saving equipment, ended in April 2020. However, several highly valuable allowances remain available to commercial property owners today.
Provides 100% first-year tax relief on qualifying plant and machinery expenditure up to £1 million per year. For most commercial property purchases, renovations, or fit-outs, AIA remains one of the most powerful tools available.
Full Expensing
Introduced as the successor to the super-deduction, full expensing allows companies to deduct 100% of qualifying main pool expenditure in the year it is incurred, with no upper limit. Available to limited companies on new qualifying plant and machinery.
Structures and Buildings Allowance (SBA)
Provides 3% per year relief on the costs of constructing, renovating, or converting non-residential buildings. Often overlooked by accountants and a key area CARS examines in every review.
Embedded Property Capital Allowances
The most significant opportunity for most commercial property owners. The fixtures and fittings embedded within the fabric of a building, installed by a previous owner or during construction, often carry unclaimed allowances that can be identified through a specialist survey. This is CARS’ area of deepest expertise.
Who Qualifies?
If you have purchased, built, or renovated a commercial property in the UK, there is a strong likelihood you have unclaimed capital allowances available. CARS works with:
- Commercial property owners and investors
- Businesses that have purchased premises
- Property developers
- Accountants seeking specialist support for their clients
- Solicitors and surveyors involved in commercial property transactions
Properties we regularly review include offices, hotels, care homes, factories, retail units, restaurants, and mixed-use developments.
How Does the CARS Review Process Work?
We carry out a detailed survey of your property, identifying every qualifying fixture and fitting that meets HMRC’s capital allowances criteria. Our team of surveyors, tax specialists, and chartered accountants then prepares a fully documented claim that stands up to HMRC scrutiny.
The process is straightforward: an initial review to assess the potential value of your claim, a site survey if required, preparation of supporting documentation, and submission alongside your tax return. We work directly with your accountant to ensure a seamless process.
Frequently Asked Questions
Can I still claim enhanced capital allowances on my commercial property?
The original ECA scheme ended in April 2020. However, significant capital allowances remain available on commercial property through the Annual Investment Allowance, Full Expensing, Structures and Buildings Allowance, and embedded property capital allowances. CARS can identify which allowances apply to your specific property and circumstances.
How far back can I claim capital allowances on a commercial property?
In many cases, there is no time restriction on claiming embedded capital allowances on commercial properties purchased before April 2014. For properties acquired after April 2014, a two-year window from completion typically applies, though exceptions exist. CARS will assess your specific situation during a free initial review.
Does my accountant not already claim these allowances?
Most accountants claim standard capital allowances but do not carry out the specialist property survey required to identify embedded fixtures and fittings. CARS operates as a specialist alongside your existing accountant, uncovering allowances that would otherwise remain unclaimed.
What types of properties qualify?
Any commercial property used for a qualifying business activity can be reviewed. This includes offices, factories, retail premises, care homes, hotels, restaurants, and commercial investment properties.
Is there a cost to the initial review?
CARS offers a complimentary initial review to assess the potential value of your claim before any commitment is made.
See how much of a tax relief you could achieve
