The Hidden Potential of Property Embedded Fixtures and Fittings (PEFF)
Every commercial property, whether newly acquired or refurbished, has a range of fixtures and fittings. These assets, seamlessly integrated or ’embedded’ within the property, are potential goldmines for capital allowances. Yet, it’s an alarming fact that many businesses and property owners have never undergone a survey specifically to identify these qualifying PEFFs.
Learn what qualifies as PEFFs...
The Pitfall of Incomplete Data
The absence of detailed insights into these embedded assets invariably means missed tax relief opportunities. Though these reliefs might be overlooked in initial assessments, they aren’t always irretrievably lost. With the right expertise and a methodical approach, these untapped savings can be reclaimed, offering a revitalised perspective on a business’s financial health.
Redefining Traditional Accounting Perspectives
The accounting sphere has commendably managed capital allowances for years. But as businesses evolve, so do their requirements. The modern approach is not about replacing but enhancing. By moving beyond the traditional boundaries and delving deeper than the obvious Fixtures and Fittings, a meticulous property survey can unearth assets often overlooked in the Land & Buildings category of the Balance Sheet.
Collaborative Synergy for Optimised Savings
The path to extracting maximum tax advantages requires a harmonious collaboration between tax advisors and accounting professionals. By tapping into the potential of embedded assets and making comprehensive claims on capital allowances, businesses can steer away from inadvertent tax overpayments and journey towards substantial savings.
Insights reveal a telling story: In roughly 90% of the cases subjected to review, additional capital allowances were found in fixed asset sections, sections such as Land & Building and Leasehold Improvement costs. This exercise often led to the identification of 25% of property-related costs and a whopping 50% of property improvements. Such findings, more often than not, prove instrumental in reshaping tax strategies for many businesses.
Eligibility for Property Embedded Capital Allowances
A common misconception is that PECA is exclusive to certain niches or large corporations. In reality, the scope is broad. Any business that owns commercial property—whether it’s an office, retail space, warehouse, or a specialised facility—might be eligible. Even if the property has been sold in the past, there’s a window of opportunity to claim.
Landlords leasing out commercial spaces, and businesses that have spent significantly on property improvements, even those that lease a property, are also prime candidates. However, it’s essential to note that residential properties typically do not qualify. Consulting with a tax specialist or advisor familiar with PECA can provide clarity and ensure that claims align with the prevailing tax regulations.
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