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Are you making the most of your Capital Tax Allowances?

Capital Tax Allowances are an often overlooked means of reducing a firm’s tax liability. Indeed industry estimates suggest that as many as 90% of commercial properties are unclaimed on and that the tax relief can amount to as much as 30% of the buildings purchase price. 

 

You may already know that a business cannot claim tax relief on the money it spends on capital assets.  However all is not lost! Capital Allowances – a form of tax relief - may be available to obtain relief for expenditure on certain fixed assets (more on what these might be later).  These Capital Allowances mean a business can write off the cost of assets over a number of years against the taxable income of the business by giving tax relief for the reduction in their value.  

 

These are a tax equivalent of depreciation and are available to sole traders, self-employed persons or partnerships, as well as companies and organisations liable for corporation tax. This has significant implications for commercial property transactions as the value of any unclaimed capital allowance for assets in the property could add value to the deal.  

 

Allowances can be claimed for fixtures such as heating or air-conditioning systems, sanitary fittings or lifts.  You can also claim for pieces of plant and factory machinery, equipment used for research/development and, until the end of the tax year, for conversions of flats above commercial properties.

 

You need to act sooner rather than later though as from April 2014, HMRC will require a Capital Allowances report at the point of sale to ensure a proper audit trail and an equitable agreement on the allocation of the claim is reached between the seller and purchaser.  This is where we can help you save money and ensure the right information and documentation is prepared for you to comply with government requirements.

 

Very large businesses are already making the most of the opportunities these tax allowances present. But the benefits can be proportionately even greater for small/ medium sized businesses.
 

Capital allowances are a complex area and here at Hughes Paddison together with specialist surveyors and tax advisors in Gloucestershire, we can ensure that you extract the maximum value from your commercial property. For further information and a free, no obligation discussion about this area or your commercial property matters please contact specialist lawyers, Doug Armstrong or Paul Engelbrecht at Hughes Paddison on 01242 574244 or email info@hughes-paddison.co.uk.