No. A common misconception is the view that any savings achieved by claiming capital allowances will be cancelled out later by an increased chargeable gain. This is not true and made clear in s41(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” (s39 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.
If you acquired a property prior to April 2014 there is no time bar for retrospective claims, meaning a claim started today could take into account years of investment in ‘plant & machinery’, reeling in tax savings on each and every item that may have been hidden from view at the time past claims were made. This creates a significant opportunity for a boost to the business’s financial position in the present day.
- 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 tax 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.
The fact invoices may not be available does not create a problem.
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