Capital allowances

Are you missing out on tax relief related to a commercial property purchase? You could make substantial tax savings with a review of your capital allowances claims. Rule changes in 2014 could mean you’ll lose out by not acting soon. 

Who can claim capital allowances?

If you are an owner of commercial property and subject to UK tax, you are entitled to claim capital allowances on qualifying fixtures in your properties. Capital allowances apply whether you own the property as an investment or it is used in your trading business. 

What are capital allowances?

Qualifying expenditure can arise on:

  • the acquisition of a building;
  • the construction of a new building;
  • the extension, alteration or refurbishment of an existing building; and
  • leasehold improvements to a rented property.

The expenditure can include:

  • lighting and electrical systems;
  • air conditioning;
  • heating; and
  • sanitary ware.

What are common capital allowance myths?

We explore some of those key myths in our capital allowances myth-busting page.

When can capital allowances be claimed?

The timing for when capital allowances can be claimed varies depending on your circumstances. It’s a common misconception that there is a time limit on claiming capital allowances. You can find out more information about this and many other capital allowance myths here.

How are capital allowances calculated?

The amount of capital allowances tax relief available is dependent on the type of expenditure incurred. The tax relief can vary from 100 per cent relief for energy efficient plant and machinery to 8 per cent for expenditure on a new lighting system. It is important to involve a specialist capital allowance advisor in the computation of the allowances available to ensure that you claim all the relief you are entitled to in the correct timescale.

Can capital allowances be carried forward?

Any unclaimed capital allowances can be carried forward indefinitely and utilised against future profits of the business.

How can RSM help with your capital allowance claims?

Many advisors simply analyse and review accounts at a high level, which highlights only the more obvious fixtures and fittings which are eligible for capital allowances.

At RSM we adopt a more detailed and forensic approach to identifying capital allowances claims for property. By using qualified surveyors we can make a full assessment of the fixtures included in the fabric of a building. We can quickly identify the likelihood and broad potential value of a claim, and can usually agree flexible fee arrangements for our work in generating a capital allowances claim. In many cases, claims can be related back to previous periods in order to generate an immediate tax refund, as well as future savings.

For further information please contact Peter Graham.

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Capital allowances case studies

Read some of our recent client case studies.

Capital allowances case studies

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Capital Allowances

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Capital Allowances - are you making the most of them?

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