Maximising Capital Allowance claims for 2019 could be the answer!
The deadline to complete Self Assessments for 2019/2020 and amending 2018/2019 Tax Returns is approaching so we urge you to review your tax position and consider claiming for the Embedded Fixtures and Fittings within your commercial property, to see if you can maximise Capital Allowance claims. This includes unclaimed costs from the historical property expenditure, which could result in a potential tax refund and reduce tax liabilities for the future.
It is a legal right under the Capital Allowances Act 2001 to claim Property Capital Allowances and this does not impact Capital Gains calculations on disposal.
Annual Investment Allowance
From April 2008 and January 2022, the Annual Investment Allowance has changed several times. The AIA one million temporary cap has been extended until 1 January 2022. If you have any questions regarding Annual Investment Allowance, please contact us.
This means that businesses can continue to claim up to one million in same-year tax relief through Annual Investment Allowance (AIA) for qualifying expenditure until 1 January 2022 and is intended to boost the confidence of companies who are planning their future.
AIA is an important consideration when purchasing a commercial property in order to maximise tax savings and should form part of the decision process. An expert can confirm what plant & machinery attracts the best treatment. It also highlights the importance of establishing the capital allowances position prior to completion on a property. For example, if two properties are being considered it may well be the case that a fixtures claim is possible on one property but not the other. This knowledge could be a deciding factor in purchasing a property that will afford the maximum tax relief in the future.
Two examples of cases we worked on in 2020
A furnished holiday let in Dorset:
- Build Cost £300,000
- Allowances Found £111,136
- Total Tax Savings** £23,338
The client concerned was a 20% taxpayer, however as the expenditure was in the 2019/20 tax year, Annual Investment Allowance (AIA) was available, allowing the full benefit created of £23,338 to be realised against tax liabilities due on 31 January 2021.
For a dental practice in Leicestershire:
- Property Cost £400,000
- Allowances Found £120,584
- Total Tax Savings** £48,234
The client concerned was a 40% taxpayer, with the result that he received an immediate tax refund of £6,350, tax savings of £5,356 against his tax due on 31 January 2021, and (assuming similar profits and tax rates) further future tax savings in the sum of £36,578.
If capital has been spent buying and/or improving a commercial property, then there’s a high probability to be a significant tax saving available!
We have worked closely with accountants to enhance the level of Capital Allowances already claimed that has helped clients to mitigate their deferred Income Tax payment and future tax liabilities. Could we help you?
5 December 2023
Capital Allowances ManualCapital allowances play a significant role in taxation. Allowing businesses to claim deductions for the depreciation of their assets. Among these assets, plant and machinery are frequently mentioned. However, the term “plant and machinery” is not explicitly defined in tax law. It should also...
22 November 2023
Autumn Budget 2023: Changes to Capital AllowancesThe Autumn Budget of 2023 has arrived, and with it comes significant changes and developments the government has put in place. Chancellor Jeremy Hunt delivered the statement on Wednesday, 22 November 2023. For businesses and individuals alike, these adjustments in tax policies can have far-reaching implications.
Our expert team are here to help answer any of your capital allowances questions or enquires you have about your commercial property.