One of the most common misconception is the view that any benefit achieved by claiming Property Capital Allowances will be cancelled out later by an increased chargeable gain (if, of course, the property is ever sold).
This is not true and made clear in Section 41 (1) Taxation of Chargeable Gains Act 1992 (TCGA 1992), which says “Section 39 shall not require the exclusion from the sums allowable as a deduction in the computation of the gain of any expenditure as being expenditure in respect of which a capital allowance or renewals allowance is made” (Section 39 TCGA says any expenditure that would be an allowable deduction when calculating an income or corporation tax liability may not be deducted when computing a capital gain).
Section 41 TCGA 1992 therefore specifically provides that it is not necessary to deduct any capital allowances from the cost of an asset for capital gains purposes, so it is not possible for a capital allowances claim to create or increase a chargeable gain. Furthermore, claiming capital allowances also has no effect on the calculation of any capital gains indexation allowance that may be claimed.
Capital Allowance claims on Land and Buildings do not reduce their Balance Sheet value. This means when you sell the property Capital Gains are based on the original cost shown in the Balance Sheet.
- This does not mean Property Capital Allowances no longer exist.
- The new rules have simply ensured plant and machinery is claimed only once.
- The legislation also ensures that available claims take place within two years of a commercial property changing ownership.
- Put simply, property Capital Allowances should now be documented in every commercial property transaction post April 2014.
That fact invoices may not be available does not create a problem.
17 December 2021
Reduce Tax Liabilities for 2022The deadline is to complete Self Assessments for 2020/2021 and for amending 2019/2020 Tax Returns is 31st January 2022. We encourage you to explore whether you are in a position to claim any historical PEFFs hidden within your commercial properties. The changes in the CAA2001 legislation means it...
25 November 2021
New Headquarters, New Rebranded WebsiteWe are pleased to announce that we have moved to a new headquarters at Festival Park, Stoke-on-Trent, alongside launching a rebrand and brand-new website. We have seen both growth in the number advisors we support across the UK and within our team which has resulted in the need for larger office space. Our...
Our expert team are here to help answer any of your capital allowances questions or enquires you have about your commercial property.