We know that Fixtures Capital Allowances can be a complicated area of tax to explain, so we have listed a number of responses to some common questions that you might have.
If you still have questions relating to your particular circumstances, then please feel free to call or email us for a free impartial discussion. Our professional team of Capital Allowance guru's are always on-hand to help.
In short, Capital Allowances are a form of tax relief given in place of depreciation (which is not allowable for tax purposes) on qualifying items of plant and machinery. This extends to many fixtures and fittings in a commercial building (and some larger residential ones). Capital Allowances reduce your taxable profits, meaning you pay tax on a smaller figure and retain more of your profits.
For more recent projects there is also the availability of the Structural Buildings Allowance.
For projects started after October 2018 the residual structural works (i.e. approximately the total project less the fixtures) now attract an annual relief that can be claim on a straight line basis.
Whilst this is only 3% per annum, it is tax relief on money you have already spent that you perfectly entitled to claim and it’s a lot better than the old rate of 0%! Investing the time to correctly identify and claim your full entitlement is a no brainer.
A Section 198 Election is the normal mechanism for transferring capital allowances on fixtures during a conveyance. We see a lot of s198 elections, the vast majority are written so badly as to be legally void and subject to challenge by HMRC and tax savvy parties on the other side of the transaction. We know it happens because we are regularly engaged to advise these parties.
This can open your clients up to potentially substantial and unexpected loss. Getting this document wrong is not going to win you any friends! see more on Section 198 Election page
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.
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.
To ensure you get all available 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.
Capital Allowances on fixtures not only represent significant opportunities but are now also a veritable mine field waiting to blow up in the face of the uninitiated this is never more the case than when a property changes hand.
When you buy or sell a property there are several requirements laid out in the Capital Allowances Act all transactions post April 2014 must comply with. Doing this generally requires a Section 198 Election to be entered into by the parties. If this is not done both parties can loss all rights to the capital allowances, devalue their property and potentially face a snap tax charge from HMRC.
Getting your capital allowances ducks in a row during a conveyance is essential to maximising your outcome. STax has advised on a substantial number of conveyances and even though advice is best given before exchange on contract we area also often going back over old transactions looking to repair a fire damaged transaction. Contact us for a free no obligation appraisal of your holdings and position. See also our Section 198 Elections page.
Claiming allowances on movable items of plant and machinery (IT equipment, machinery, vehicles etc) is very much within the skills sets of most general practice accountancy firms. However due to the difficulties of accurately valuing systems imbedded in a property and the maze of case law in this area, the services of a specialist are required to access all of your due tax relief.
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.
We stress that not advising on Capital Allowances on fixture is no negative reflection on your general accountant. Most of our Capital Allowances work on fixtures 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 Allowance 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). Read more
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, fit-out etc) or by purchasing the property. In both instances you could be sitting on a substantial tax write off.
We are happy to conduct CPD lectures and training for you and your team be at as part of our webinar program or even a visit to your offices. This training for you and your staff will allow the effective identification of areas of risk & opportunity, ensure compliance with the Capital Allowances Act and clock up a few more CPD points at the same time!
As well as providing advice direct to your clients we can also supply you with a number of resources, including:
• Draft emails to bring these tax related matters to you clients’ attention
• Assistance answering Capital Allowances section of CPSEs
• Articles for newsletters
• Model documents e.g. s198 elections
• Technical briefs for use within your practice
There is no statutory time limit on how far back we can look however, the purchase could have been many years ago and as Capital Allowances on fixtures are driven by the purchase consideration going back to far may mean that the property purchase consideration was very low meaning that the yield may not be worth the time investment.
It is worth mentioning that it is always best to get and initial review first, as this is a free service that we provide. This should give you a clear indication, if any allowances are likely to be available for your property.
To arrange a call back from our team simply fill-out the form below and a member of our team will be in touch to discuss your particular circumstance.
Check out our FAQ's page for some of the most common questions our customers ask us.Visit FAQ's Page
Alternitively why not give us a call. A member of team are always on hand and happy to answer any questions regarding Capital Allowances that you may have.
If you are buying, own or have incurred capital expenditure on 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.
We only charge as a percentage of the unclaimed Capital Allowances we find and successfully claim. With no fixed fees or upfront costs of any kind, as long are you are paying tax, it is mathematically impossible to be anything other than better off working with us.
I can highly recommend STax as they are friendly, efficient and experts at what they do. Even better, my tax bill for this year has just gone down by over £12,000 as a direct result. Carlsberg don't do tax advisers, but if they did...
Furnished Holiday Let Owner
STax has worked with us on many property recovery and restructuring scenarios and examined the Capital Allowances case providing useful additional input in each case. Andrew and his team have always taken the time to explain their work with allowances and its implication in terms that non tax people can follow. I am pleased to recommend them.
Partner at SHW
We instructed STax to review our main surgery in Hove at the end of 2012. We received an enquiry from HRMC and the District Valuer. I was impressed by how STax took ownership of the negotiations and brought them to a swift close. Overall we successfully claimed just under 40% of our expenditure in allowances. This gave us a massive and very welcome reduction in our tax bill. We have since instructed STax to look at allowances on the rest of our branches.
Owner, Brighton Implant Clinic
STax has successfully advised many of our clients on capital allowances. Their work has not only had positive financial implication on our business but has also added real value to our client relationships. I have no hesitation in recommending STax to all our clients.
Paul Wade SHW
Over the time we have known Andrew Stanley at I have come to value his commercial and technical expertise on a wide range of subjects.
Act Legal Ltd
Tax as most people know is a complex area, Andrew Stanley of STax has the in-depth knowledge to simplify it. He is straightforward and able to apply his expertise to real life business problems with the aim of tax saving. Over the past few years I always found STax to be responsive, approachable and professional.
Partner, Hardwick Hartley Partnership
We initially instructed STax to review our capital expenditure on extending and improving our facilities. STax worked efficiently and professionally, liaising seamlessly with our external auditors and internal finance team in order to deliver our capital allowance report. As a result of the confidence we have in the team at STax and their abilities, together with the support they provided us, we had no hesitation in engaging them again to review a second tranche of expenditure. We highly recommend their tax services
Burnley Football Club
Clarity throughout and achieved what we set out to do, communication was maintained to let me know every step of the way and the end result was achieved within a reasonable timescale. So all in all very pleased and will be using again.
A complex area of taxation dealt with efficiently and professionally, from the first meeting with Andrew Stanley the whole team provided an informative and outstanding service throughout the whole process.