Making gains: capital allowances can add up to significant savings

Are you missing out?

Many consumer businesses are missing out on substantial tax allowances. Capital allowance tax relief is available on investment in plant & machinery for business use such as displays in a hotel, stores and restaurants. Often tax relief is missed when fitting out or refurbishing a property as the construction expenditure is not always very detailed.

How can you  maximise your tax relief?

By reviewing your refit or construction expenditure you could identify allowances that are hidden within the overall project costs. You need  to break down blocks of expenditure into smaller amounts to maximise the tax relief available.

How much is it worth?

As much as 85% of the expenditure on a refurbishment project can qualify for tax relief. 

How long does it take to obtain the relief?

This depends on the nature of the expenditure. Energy efficient expenditure has a tax relief at 100% and is the quickest to be paid. Expenditure on electrical systems is the slowest tax relief rate of 8% per annum. However, investing in energy efficient display lighting may qualify for 100% tax relief in the year of expenditure. This could result in cash flow benefits.

Are there other tax reliefs that we are missing out on?

Yes, for example one area is often overlooked. If a  hotel, store or restaurant is refurbished, some of that expenditure is a like-for-like replacement. This can be treated as revenue in nature. Revenue expenditure is 100% deductible as it is charged to the profit and loss account. If reviewed it can lead to obtaining tax relief on items that would not ordinarily qualify such as on replacement shop fronts. Using our experience RSM has supported clients to achieve cash repayments for clients through reviews of historic projects to identify missed revenue expenditure.

What do we need to do to make sure we don’t miss out?

  • carry out a review of historic expenditure to ensure that all tax relief has been captured as there is no time limit to make a claim; and
  • breakdown current and future refurbishment expenditure to help maximise tax relief on energy efficient plant & machinery.

How RSM can help

We have a specialist team of dedicated capital allowances experts who can review your expenditure and highlight where you could be eligible for relief.

Our team includes building surveyors who can use their skills to break down historic costs into smaller blocks to maximise the tax relief available and can work with you on future projects to ensure you are maximising all the relief available to you.