Company’s project summary:
One of our client’s recently undertook a fit-out project of a new office space, with expenditure on the project totalling c.£3.2m. Our specialist Capital Allowances Team was engaged to review this expenditure and unlock the tax reliefs available in respect of it.
The updates to the office space included:
- Stripping out existing doors, partitions, ceilings, carpets, lighting and air conditioning
- Installation of new partitions, doors, floor coverings, ceilings and bespoke joinery including a reception desk, seating and storage cupboards
- Mechanical and electrical works, such as new power systems, lighting, air conditioning, IT infrastructure and security systems
- New staff welfare facilities, including toilets and showers, as well as installation of office furniture such as desks and chairs
How did we help our client optimise their tax relief?
We took a multi-faceted approach to optimising the client’s tax savings from the capital expenditure. Certain aspects of the project involved the replacement or repair of existing elements of the office, such as wall repairs, door replacements and ceiling tile replacements. These costs were claimed as revenue deductions, which resulted in the client receiving more immediate and substantial tax savings compared to capital allowances such as Structures and Buildings Allowances (SBA) that might otherwise have been available.
The client also benefitted from First Year Allowances (FYA), which included the Super-Deduction and special rate (SR) allowance. These schemes significantly improved the client’s cashflow position by significantly accelerating the reliefs identified. You can read more about how capital allowances super deduction and SR allowance works and how to claim it here.
The results:
We were able to identify allowances that would generate tax savings of c.£640k over time. Less than 1% of the expenditure was found to not qualify for a form of tax relief.
By leveraging the Super-Deduction and SR allowance, we were able to substantially increase the client’s initial tax savings, as without the Super Deduction, the client’s first-year allowance would have only been around £70,000, with the remainder of the savings spread over a long period of time. Our work on establishing entitlement to claim FYA increased this to c.£480K.
Although the Super Deduction policy ended on 31st March 2023, expenditure that was incurred before then can still be claimed. For expenditure that has been incurred since that date, a similar relief would also be achievable using the Full Expensing regime. Full Expensing allows UK companies to deduct 100% of the cost of capital equipment from their profits in the year it is bought, instead of spreading the cost across multiple tax years.
This is just one example of how our specialist team work in the office fit-out sector. These same principals apply across a wide range of other sectors such as leisure, holiday lets and manufacturing.
At PKF Smith Cooper, we provide expert capital allowances services across the Midlands, and our expert team can help you uncover significant savings in your business assets and guide you through the process of claiming your rightful allowances. Get in touch today to find out more.
We were pleased to help our client save over £640k, and to be able to realise the majority of that benefit almost immediately. We have seen big savings like this when helping other businesses optimise their tax reliefs, and many others can be helped to unlock cash through expert guidance and support.
Sam Parker-Hully, Capital Allowances Director