Capital Allowances for businesses
All trades are eligible to claim Capital Allowances. Capital Allowances can potentially be released from capital expenditure relating to a program of works or even a proportion of the purchase consideration of a property.
As Capital Allowance specialists our role is to assist you in maximising claims for the Capital Allowances to which you are entitled. This is to make sure the correct amount of tax is paid and not a penny more. There is no need to tip HMRC!
All businesses need to maximise their revenues and minimise costs. For a successful business tax is often the single largest outgoing. Unfortunately, the payment of tax is one of life’s two great certainties. You are however under no obligation to volunteer extra.
Capital Allowances on systems endemic to a building are often overlooked. Whereas a good accountant should pick up Capital Allowances on loose items of plant and machinery (IT infrastructure, vehicles etc), the Capital Allowances due on the fixtures in a building (electrical distribution, fire alarms, lift etc) are often overlooked. Their value is included in the purchase consideration of a property or sometimes hidden amongst ambiguous construction invoices.
We stress that not advising on Capital Allowances on fixture is no negative reflection on your general accountant. Most of our Capital Allowances work is referred to us by general practice accounting firms. Capital Allowances on fixtures is a highly specialised niche area of tax with over a 100 years’ worth of case law to be mindful of. Furthermore, providing effective Capital Allowances advice requires a marriage of disparate skills from taxation, accounting and quantity surveying that you simply won’t find in any but the very largest accounting firms in the country (KPMG, PWC etc).
STax combines all the skillsets required to provide robust Capital Allowances advice under one roof, making us perfectly positioned to assist you in claiming your full entitlement to Capital Allowances.
Remember, capital allowances are specifically allowed by legislation and all qualifying businesses are entitled to them.
What Capital Allowances can be claimed on will vary from building to building and between different industries. These typically include systems like heating, security, general power, fire alarms and sometimes even the decorative items! These Capital Allowances eligible fixtures would have come into your ownership one of two routes: by undertaking a program of works (development, fitout etc) or by purchasing the property. In both instances you could be sitting on a substantial tax write off.
Capital Allowances from a property purchase:
The purchase price paid for a property is deemed to have contained an amount for the Capital Allowances eligible fixtures present in the building at the time of purchase. Because your capital expenditure is the purchase consideration of the property, not the sum of the components, you can’t simply claim the value of the fixtures even if you could identify them all. Fortunately, the Capital Allowances Act 2001 makes provision for this situation and allows us to calculate a fair and reasonable apportionment of your purchase consideration. The output of this calculation will identify the percentage of the purchase price you are able to claim Capital Allowances on.
These claims can often equate to a substantial percentage of the cost of property. Claims sometimes amount to as much as 35% of the value of a freehold i.e. £350k of tax relief waiting to be released for a property bought for £1m.
There is no time limit on how far back we can look i.e. the purchase could have been many years ago. However, what was or wasn’t done during the conveyance can have a big impact on your entitlement to make a claim. Because of this, Capital Allowances advice is generally best given before exchange of contracts. However, here at STax we have a wealth of experience unpicking the history of past purchases and securing favourable Capital Allowances outcomes even where others have tried and failed!
Capital Allowances from a program of construction works:
Picking up all the Capital Allowances eligible expenditure in a development or renovation is not always as straight forward as it sounds.
Often invoices and records will cover expenditure that is both eligible and ineligible for Capital Allowances. Because of this even a very knowledgeable general accountant is likely to miss a large proportion of the Capital Allowances available. When you layer in effect of correctly allocated, labour, apportionment of eligible professional fees and prelims and even expenditure on the modification an existing structure/land to accommodate new plant and machinery, we are confident of delivering a substantial amount of extra Capital Allowances.
For more recent projects there is also the availability of the Structural Buildings Allowance which is often missed. Whilst this is only 3% per annum, it is tax relief on money you have already spent that you perfectly entitled to claim. Investing the time to correctly identify and claim your full entitlement is a no brainer!
To ensure you get all your Capital Allowances we will review and cross-examine all the available project information (invoices, design specification, bill of quantities, planning documentation, contract sums etc) and expertly survey the property to make sure that all Capital Allowances have been identified and claimed. This will normally result in a marked increase in the amount of Capital Allowances available. We also provide a consultancy service for the design phase of a project to help ensure all opportunities to build in Capital Allowances are exploited.
We only charge as a percentage of the extra allowances we find and successfully claim. With no fixed fees or upfront costs of any format charged, as long are you are paying tax it is mathematically impossible to be anything other than better off working with us.
If you own or have incurred capital expenditure on your property and want to find out what you could claim, then please don’t hesitate to contact us today for a free no obligation Capital Allowances appraisal of your assets.