Capital allowances

Capital allowances provide annual tax deductions, as a percentage of the amount spent on certain property-related plant and machinery including:

  • electrical systems, including lighting systems
  • cold water systems
  • space or water heating systems, powered ventilation systems, air cooling or air purification, and any floor or ceiling included in such systems
  • lifts, escalators and moving walkways
  • some kitchen equipment
  • bathroom suites and some fittings
  • fire alarm systems
  • CCTV systems
  • burglar alarm systems.

As a business owner, you are likely to find the capital allowances regime a challenging one. With complex rules, and different percentages of tax relief available depending on the type of assets involved, working with specialists in the field, like Haslers, is a sensible step to help maximise the tax benefits.

Paul Reynolds explains the complexities of Capital Allowances and why businesses could be missing out on this valuable tax claim

Changes from April 2014

From 1 April 2014 for corporate taxpayers and 6 April 2014 for individuals, capital allowances will only be available when you buy a second-hand commercial property (not a new build) if the past owner “pooled” qualifying expenditure for capital allowances, i.e. notified it to HM Revenue & Customs in a tax return.

This means that if the previous owner failed to claim capital allowances, the entitlement will be lost for all future purchasers of the building.

As a purchaser, you can take certain tax planning steps from April 2014, but these must be put in place before you buy. Retrospective action will not be possible in most cases, so if the seller failed to claim capital allowances they were entitled to, you will need to ensure that the seller agrees in the sale documentation to pool its expenditure.

How can Haslers help?

At Haslers, we provide support for capital allowance claims by the owners of commercial property and can review potential capital allowances entitlement on a no claim, no fee basis.

We can also assist with claims to secure entitlement to enhanced capital allowances, contaminated land relief and Business Premises Renovation Allowances. We only charge a fee if we are able to generate an entitlement to tax relief, with the fee based on the sum agreed with HM Revenue & Customs.

Using our service can bring significant financial dividends and we have achieved successful capital allowance claims of several hundred thousand pounds for clients.

For more information on how our East London and Essex capital allowances services can help you, please contact Paul Reynolds.