Capital Allowances – You could be paying too much tax!
Capital Allowances (CA) are a valuable form of tax relief for any tax-paying individual or business that owns a commercial property, and could be worth up to 40% of the purchase price. If you are a UK tax payer, either personal or corporation tax, claiming CAs could reduce your tax bill and even secure a sizeable refund.
If your commercial property has not been surveyed you could be missing out on £1,000s of unclaimed allowances.
As long as the property is not held in a pension fund, CAs can be claimed by sole traders, self-employed persons or partnerships for expenditure on existing plant and machinery within a commercial property or when a property is refurbished. The result can be considerable tax mitigation and often a refund of overpaid tax in prior years.
CAs can only be claimed once in the life of a property. They can be claimed at any time but if you are buying or selling commercial property new rules, which came into effect in 2014, bring obligations which make things a little more complicated. If CAs are not properly dealt with at this stage, they could be lost forever.
The new rules require the vendor to ‘pool’ any fixtures prior to the sale of the property. This means that a CA report will be required at the point of sale to ensure that there is a proper audit trail and that an equitable agreement on the allocation of the claim is reached between the vendor and purchaser.
Given the complex nature of the legislation, it is essential that commercial property owners employ the services of a CA expert, particularly if they are about to sell a property. There are so many exceptions, stipulations and grey areas. RIFT’s CA expertise enables us to survey the property and compile a report that will provide the maximum permissible allowances under complex tax legislation.
RIFT has worked with a wide range of property owners, including the owner of a two storey office building in Sussex which they acquired for £540,000 in May 2013. They spent £220,000 on refurbishment, of which £180,000 was eligible for CAs. We identified a further £160,000 of CAs and, taking into account Annual Investment Allowance (AIA), the client was able to save nearly £70,000 over two years.
For more examples of recent CA claims, click here.
Remember, if you own a commercial property, pay UK tax (personal or corporation) and the property is not held as stock or part of a pension fund, you could be missing out on £1,000s of unclaimed allowances.
And, if you are about to sell a commercial property, you need to take action now.
Boxpod’s Jon Maynard is happy to discuss CAs. Call him on 07768 884040 or email email@example.com
For a free, no obligation review of your property contact RIFT Capital Allowances on 01233 653002 or email firstname.lastname@example.org