1) Evaluate Eligibility for Capital Allowances
Understanding whether you qualify
Before selling a commercial property, it’s crucial to determine if you qualify for capital allowances. Generally, allowances can be claimed on plant and machinery, integral features, and certain renovations or improvements. Consult a specialist, such as a tax advisor or capital allowances expert, to assess your property’s eligibility and estimate the potential allowances available.
2) Gather Relevant Documentation
To support your capital allowance claim during the sale process, assemble all relevant documentation. This includes invoices, contracts, and other records demonstrating the purchase or installation of qualifying assets. Ensuring you have accurate and detailed records will help substantiate your claim and provide evidence to potential buyers.
3) Commission a Capital Allowance Review
Engaging a professional to conduct a capital allowances review can be highly beneficial. A specialist will thoroughly evaluate your property to identify any previously unclaimed allowances and ensure compliance with UK tax legislation. It’s important to properly evaluate qualifying items with the relevant expertise to ensure a qualifying claim is put together. This review can help maximise the value of allowances you retain or possibly transfer to the buyer to minimise the risk of lost opportunities.
4) Inform Prospective Buyers
A robust approach is advised when selling a commercial property with capital allowances. Before disclosing any information to the buyer, ensure you fully understand what, if any, capital allowances are available and what best suits your position, e.g., keep, sell, or a mixture of the two.
Once you have determined your preferred option, it is only then you complete key documentation setting out your intentions without giving too much away in most instances. Key documents will include Commercial Property Standard Enquired (CPSE.1), a Section 198 Election (S198), as well as specific Contract provisions. It’s important to maintain control yet provide sufficient information to the seller to avoid confusion, complications, and unnecessary delays.
5) Transferring Capital Allowances
Legislative requirements & Time restrictions
In the event the decision is taken to sell capital allowances (or give them away as part of the deal), there are specific legislative requirements and time restrictions that need to be fully understood. It’s, therefore, important to seek professional advice and work with your tax advisor to ensure the correct documentation, such as a Section 198 election, is prepared and executed. This will facilitate the transfer of allowances and protect both parties’ interests.
6) Maximising support for a smooth selling process
Tax specialist advice
When selling a commercial property, it is highly advisable to seek the expertise of a tax specialist to guide you through the intricacies of UK tax legislation. They can offer valuable assistance in preparing essential documentation and provide insights into potential tax implications. To further streamline the process and ensure no crucial areas are overlooked, we offer our clients a comprehensive ‘Commercial Property Legal Pack’ service. By opting for this service, you can trust us to take full control, leaving no room for oversight.
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.