Firstly, what are capital allowances?
Capital allowances are a taxable benefit against capital expenditure on commercial property.
The ability to claim capital allowances is dependent on the type of expenditure. As well as what qualifying items are included in the expenditure, as this may include existing items in a property purchased by a previous owner. Qualifying allowances are available to an individual, a partnership, and a limited company provided there is a liability to UK tax against profits.
Different kinds of capital allowance for offices
Purchase of a property
If businesses or individuals purchase a commercial property, it is very likely that capital allowances are claimable. Allowances may be claimable in respect of items in the property at the time of purchase. However, this is subject to these items having not been claimed by the previous owner, and will almost certainly be claimable on any improvement costs after purchase.
Property Embedded Fixtures and Fittings or PEFFs for short, are the plant, machinery and fixtures that are embedded in a building. Fixtures and fittings relate to anything that is ‘fixed’ into the property, so they could be nailed or bricked in. For example, radiators, lighting, ironmongery to doors and windows, and lifts.
At CARS, when explaining PEFFs to our clients, we always use the same analogy. ‘If you tipped the building upside down, everything that remains in the building could qualify for tax relief, when we consider how these items allow the business to trade from that building’.
Structures and Buildings Allowance is claimable when a party pays the costs of renovations or the building of a commercial property. Individuals can claim costs which also include the preparation of the site. In addition to construction works, renovations, and fitting-out works. If you bought the structure from a developer, you can claim SBA on the price you paid the developer.
How do I claim
Capital allowances are claimed in your tax return.
They can be claimed in an “open” tax return, which will be your current tax return, and usually, the one previously submitted. Claims for capital allowances are not time-barred in many situations. So for example, if the items were purchased (say) 20 years ago, that does not necessarily mean that allowances cannot still be claimed.
Want to know more?
Capital Allowance Review Service (CARS) is a tax specialist on capital allowances. Our team has over 20 years of experience and we have a 100% success rate. Our team of skilled individuals with work with you at every stage of the process. We will deal with all aspects of the claim, from the initial assessment to submitting the claim to HMRC.
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.