My accountant already deals with capital allowances. Have I claimed everything I need to?
We do not doubt accountants have an established routine for assessing capital allowances and therefore it’s important to stress that we’re not questioning an accountant’s ability. We look to calculate and/or enhance the level of CAs available by introducing additional disciplines.
CAs are a vast subject with good accounting routines claiming CAs where & when sufficient information is made available.
For example, a property survey is completed to identify items that are not visible within the paperwork and sit within Land & Buildings on the Balance Sheet (not Fixtures & Fittings).
CAs relating to the property are complex. We often support accountants where sufficient details are available however, complex legislation creates challenges as to whether the costs qualify or not. Having expert knowledge in a complex area is another example of why accountants require support to ensure claims are maximised.
Take a look at our process.
Can I claim if I rent the property?
Yes, you can still claim CAs if you rent and occupy a property.
Any claims would be applicable and limited to the property improvement costs (likely “leasehold improvements”). A Landlord can also claim CAs against the items the landlord paid for, owns, and provides to the tenant. Typically, a landlord’s claim relates to the fabric of the building such as electrical, heating & safety systems.
Careful consideration should be made where tenants come and go due to the complexities and interaction of beneficial ownership, and linking claims to costs.
Take a look at what is classified as plant and machinery.
How does HMRC contribute to the administration of capital allowances?
HMRC, or Her Majesty’s Revenue and Customs, collects taxes and administers various tax reliefs and incentives. Regarding capital allowances, HMRC’s role is to set out the rules and regulations governing the claims process and ensure compliance with tax legislation. They provide guidance and resources to help individuals and businesses understand and correctly apply for CAs. It is essential to refer to HMRC’s official guidelines or seek professional advice to ensure you are following the correct procedures and maximising your claim.
How far back can I claim capital allowances?
Changes made to legislation have created significant confusion surrounding timescales of when claims can be made. This alongside assessing when best to make a claim regarding tax & first year allowances, means one of the main questions we are asked how far can we go back.
In short, the entitlement to claiming capital allowances against property acquisition costs could be 2 years from completion. However, this time window is not always applicable as it’s subject to several factors relating to the transaction.
The entitlement to claiming capital allowances against improvements, renovations, extensions, or new building projects is not currently limited by time.
Our advice would be to review capital allowances in the year the costs were incurred. If however, costs were incurred in previous years, we would strongly recommend an initial assessment is still carried out.
It is advisable to consult a capital allowance expert who understands legislation as well as property law to best determine your entitlement to claim capital allowances against your property costs.
Take a look at our successful formula.
What type of expenditure qualifies for capital allowances?
CAs can be claimed on various types of property-related expenditures. It is important to note that not all types of expenditure qualify as it’s subject to functionality and legislation applicable to the year in which expenditure took place.
Learn about movable and immovable capital allowances.
Can I claim capital allowances on assets purchased before I started my business?
If you have purchased assets before starting your business, you may still be eligible to claim CAs on those assets. However, there are certain conditions to consider. CAs can typically be claimed on assets that are used for business purposes, even if they were acquired before the commencement of your business. These are typically called pre-trading expenses and it is important to establish the date when the assets were first used for business purposes.
Get in touch with our expert team to see if you qualify.
What happens if I sell an asset for which I have claimed capital allowances?
When you sell an asset for which you have previously claimed CAs, there are implications to consider. The sale of such an asset may trigger a balancing event for tax purposes. This means that if you sell the asset for more than its written-down value (the value after claiming CAs), you may need to pay tax on the excess amount. On the other hand, if you sell the asset for less than its written-down value, you may be able to claim a CAs called a balancing allowance, which will reduce your tax liability.
Learn about balancing charges and balancing allowances.
Are there any special rules or considerations for claiming capital allowances in certain industries or sectors?
There are special rules and considerations for claiming CAs in certain industries or sectors. For example, for a claim to be made for furnished holiday lets there are certain rules and limitations to be considered before a claim is possible. Additionally, there may be industry-specific rules regarding the classification and treatment of assets, which can affect the rate and timing of capital allowances.
Take a look at our case studies to see some of the different industries we have worked with.
Can I claim capital allowances on assets acquired through leasing or hire purchase agreements?
It is possible to claim CAs on assets acquired through leasing or hire purchase agreements. The eligibility and treatment of capital allowances may vary depending on the specific terms of the agreement. If you are the lessee or the hirer and have substantial rights to use and possess the asset, you may be able to claim capital allowances on that asset. The allowances are typically based on the cost of the asset over the term of the lease or hire purchase agreement. It’s important to review the specific terms and conditions of the leasing or hire purchase agreement, as well as any relevant documentation, to determine your entitlement to claim capital allowances.
If you have any further questions regarding this, get in touch with our expert team to help.
Are there any limits or restrictions on the amount of capital allowances I can claim?
Yes, there are limits and restrictions on the amount of capital allowances you can claim. The specific limits and restrictions depend on the type of assets and the capital allowances available. For example, the Annual Investment Allowance (AIA) sets a limit on the total amount of qualifying expenditure that can be claimed in a given tax year. The AIA limit is subject to change and varies over time. Additionally, there may be specific rules regarding the timing and rate at which capital allowances can be claimed for certain assets, such as buildings.
Learn more about different types of capital allowances.
In all scenarios, it is crucial to consult a specialist in the field of property capital allowances to ensure that you have attained the maximum tax relief possible and that your claim aligns with the latest legislation.
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.