Frequently Asked Questions About Capital Allowances

Below we have listed some of the most common questions that our clients ask us regarding Capital Allowances. If you have any other questions regarding your Capital Allowances then please feel free to get in touch, our team are always happy to help.

Speak to our team

Capital Allowance FAQ's

Request a call back
Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

What are Capital Allowances?

In short, CapitalAllowances are a form of tax relief given on eligible items of ‘plant and machinery’. They reduce your taxable profit, and therefore the amount of tax you pay. They are available on embedded fixtures in commercial and some residential property.

Whilst claiming Capital Allowances on the movable items, (machinery, vehicles etc.) is nothing extraordinary, many are unaware they are also entitled to claim a proportion of the purchase consideration of a property. This is allowed because the purchase expenditure is deemed to have partially been for the fixtures in place at the time.

To find out more visit our Capital Allowances page or fill out the form to request a call back from one of our team.

Who qualifies for Capital Allowances tax relief?

If you are a UK taxpayer or have a company registered in the UK which owns commercial property anywhere in the world, there is a very good chance you could be due a sizeable tax benefit due to unused Capital Allowances within the property.

What items can I claim on?

Usually your Accountant will claim on everyday loose items of plant such as computers, desks, chairs, etc. However, most Accountants will not have the necessary skillset or resources required to form a ‘just and reasonable’ apportionment of a property’s purchase price and place values on the qualifying items of plant within. STAX, on the other hand, have on a far more detailed understanding ofCapital Allowances legislation and carry out a detailed on-site survey of your property to help maximise your claim.

The type of Items that you can expect to claim on are generally anything that is screwed glued or embedded to the structure of the building. Such items include all electrical cabling, general lighting, security installations, heating systems, lifts, plumbing and sanitary ware, amongst others.

In our experience different commercial sectors will have a variant in the percentage of claimable items available for Capital Allowance (to get a better understanding on this visit our Building That Can Claim section).

Will this affect my capital gains tax or reduce the value of my property?

No, claiming Capital Allowances will not increase your Capital Gains tax bill on a property.

There is a distinction to be drawn between the moveable furniture &equipment (fixtures & fittings) which are separate items to the building and embedded plant & machinery which are fixed to the building.

The embedded plant is not removed from the building and therefore not allocated separately in the accounts. The introduction of the Capital Allowances into the pool or pools is therefore a tax concern and not an accounting consideration.The accounts are not amended; the only change is to the respective pool or pools where the Plant & Machinery Allowances are introduced.

I purchased my property over 10 years ago. How far into the history can you look at the Capital Allowances?

There is no time limit as to how far you can go back, however, this relief is driven by cost, not by the current value. So in some instances, looking back too far can become a point of contention.
There are other limitations in regard to when the property was purchased, however, it is always worth us looking.

We offer a free initial review, which will give you a great indication of what can be done. To get started, why not check out our Capital Allowance calculator to check what Capital Allowances you could be entitled to claim.

It sounds too good to be true. There must be some hidden costs?

There are absolutely no upfront costs or hidden fees. Our fee will only become due once we have completed our work and produced our report showing all previously unclaimed allowances.

We only charge as a percentage of the allowances that we find. We feel it is the best and fairest way to work with our clients.

Should we discover that no Capital Allowances are available, we will close your file and no fee will be due, regardless of the work undertaken up to that point.

My accountant already deals with our Capital Allowances. Isn’t this something they should have done already?

Most Accountants provide some form of Capital Allowances advice. However, because the tax system is vast, General Practice Accountants are very unlikely to be a specialist within every area of tax. Much like General Practice Doctors wouldn’t be expected to conduct heart or brain surgery.

To maximise the Capital Allowances you can claim, we possess a specific skillset (such as Chartered Accountancy, Tax Advisory and Chartered Surveying)with a much more detailed and up-to-date understanding of Capital Allowances.Therefore, general firms of Accountants (apart from some larger firms), will seek specialists like us to handle this area for them.

We are consistently able to find unidentified tax savings in the form of Capital Allowances which have previously been overlooked by our clients and their advisors.

Working alongside your Accountants will ensure a positive outcome, and your Accountant will be able to sign off our work before it is submitted to HMRC.

I don’t have sufficient taxable profits to benefit from Capital Allowances. Should I bother with them?

Yes. In our experience, it can still be worthwhile identifying Capital Allowances, especially if a taxable profit is expected in the near future.

There are situations in which Capital Allowances will not yield an immediate return. However, they can sometimes be used to offset Capital Gains Tax liabilities, surrendered to group companies, passed on to new owners and more, which can be a fantastic selling point to the right buyer should you desire to sell in the future.

Ultimately, everybody’s circumstances are different and we would always recommend getting in touch with us so that we can carry out an appraisal and provide advice. Head over to our Find us page and contact a member of our team who will be happy to help you with any advice that you need.

What is HMRC’s role?

HM Revenue & Customs created Capital Allowances legislation to encourage more commercial property investment by individuals and companies.

We do not request any information from HMRC to process your claim. Any information we require will be requested either from you yourselves or advisors(Accountants, Solicitors, etc).

Our report has been specifically formatted to adhere to HMRC's criteria ensuring that all items listed are clearly ‘just and reasonable’ which we believe is one of the reasons that over our ten years of operation less than 1%of our reports submitted to HMRC have had the need for a further enquiry.Nevertheless, routine enquiries into a Capital Allowances submission can naturally occur from time to time. In such circumstances, we will handle any queries raised by HMRC and provide all the necessary support under the terms of our contract.

If for any reason a Capital Allowance report was reduced by HMRC, our fee would reflect that, resulting in our fee for that proportion being refunded to you.

Still have questions? Check the Capital Allowances page or email us at info@s-tax.co.uk