Private investors and businesses of all sizes could receive up to 40% of a commercial property purchase back in tax free income by taking advantage of the Capital Allowance Act 2001, which allows owners to claim for the value of plant and machinery within a commercial property.
Plant and machinery is defined as items that are owned by the business or business person and kept to use in the business. Items within a commercial property that attract Capital Allowances can include a range of the integral features; from heating and ventilation installations, data and telecoms systems, carpets, lighting and general power systems, fire and security alarms right through to fixtures such as kitchen cabinets, bathroom suites and fire alarms. The list is extensive and applicability depends entirely upon eachsituation – broadly, the asset must be used by the business and be a part of the building when it was bought.
This tax relief has generally been thought to be the domain of larger businesses and blue chip corporations but with the right expertise, smaller companies can also take advantage of this sometimes overlooked tax break.
At Innovation Relief Specialists Ltd, our technical team have more than 35 years’ combined experience in taxation, but more specifically within the niche area of Capital Allowances. Most business owners and investors have never heard of this opportunity, but those that have are benefiting from thousands of pounds in tax free income each year.
Capital Allowances can only be claimed if the property is held as an investment, so does exclude
property developers who generally hold the property in stock. Legislation also prevents landlords
from claiming Capital Allowances within a dwelling house. However, an apartment complex will have embedded Capital Allowances within the communal areas of the building. Reception areas, hallways, stairwells and lifts will all qualify within a communal claim and could equate to 10% of
the purchase price in Capital Allowances.
Anyone who has bought a qualifying property in the past two tax years or more, and paid the
tax due could be eligible to claim for Capital Allowances and entitled to a tax refund from HMRC. As standard, a tax return can be amended up to 12 months after its filing deadline and the figure we identify would be inputted into that tax return to generate the tax refund.
Innovation Relief Specialists Ltd can answer a wealth of questions in relation to Capital Allowances
as each case is unique. If you have any queries that we have not covered above, please get in touch.
By Chris Fox, Technical Consultant of Innovation Relief Specialists Ltd
Innovation Relief Specialists Ltd utilises the experience of a technical team with more than 20 years combined experience of processing successful tax claims to HMRC with experienced Capital Allowance Surveyors and Chartered Tax Advisors. They look to assist those who have bought commercial property for more than £250,000 and would like to reduce the amount of tax they need to pay.