What are property capital allowances?
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, we 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 items are missed:
- Property acquisitions can include inventory for moveable items only, however, details of the property fixtures & features are often not provided and 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.
Examples of property capital allowances
FAQ's about capital allowances
How do I claim Capital Allowances?
Capital allowances are claimed on your tax return, and these are normally claimed 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 expenditure took place.
What is the capital allowance rate for plant and machinery?
The ‘normal’ allowance is a writing down allowance (WDA) of 18%, or a special pool writing down allowance of 6%. But there is currently a much more beneficial allowance available, the annual investment allowance.
What is Annual Investment Allowance (AIA)??
AIA provides 100% tax relief on assets qualifying as plant and machinery, subject to an annual maximum and excluding cars.
What is super-deduction?
“Super-deduction” was introduced on expenditure made between 1 April 2021 until 31 March 2023, allowing, in certain circumstances, capital allowances to be claimed at an increased rate of 130%. There is no upper limit on expenditure that qualifies for super deduction.
**This has now ended, however, a claim may still be possible.**
What is Structures and Buildings Allowance (SBA)?
SBA was introduced on certain expenditure from 29 October 2018, and is an allowance currently claimable at 3% per annum, on most items that are not claimable as capital allowances.
McKellens Chartered Accountants
“I am one of the partners of a two-partner accountancy practice which celebrated over 100 years of providing client service. When we moved offices nearly three years ago we were introduced to a firm called Capital Allowance Review Service who specialises in making sure you claim the maximum amount of tax allowances possible for commercial property. Like many other general practitioners, we thought that we knew all the important stuff about capital allowances…after Paul Roberts had finished with us we realised there was a whole lot more to be claimed than we first thought!…. For those of you who own commercial property or who have clients who own commercial property you simply must ensure that you/they have claimed as much as possible because if you don’t, somebody else will! Being able to tap into a specialist organisation that does all the technical and research work for you is a huge relief and makes you stand out compared to the competition.”
Chris Booth | Partner
Why come to us for support?
We are 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, which allows us to unlock funds that clients did not know they had.
Where can I find more information about capital allowances?
We always recommend you seek advice from a suitably qualified advisor before taking any action. Getting the right advice is crucial in satisfying the latest legislation and securing tax savings for you and your business.
For information about how we can help support you maximising tax benefits please contact us for your complimentary review.
31 August 2023
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Our expert team are here to help answer any of your capital allowances questions or enquires you have about your commercial property.