Our dedicated Capital Allowances team can help make sure you aren’t missing out on the valuable tax reliefs that you are entitled to. If you have acquired or undertaken work to a commercial property, then get in touch with our team to find out how much you can save.
Capital allowances are a government sponsored form of tax relief available for expenditure on assets used within businesses. They are particularly complex, but also particularly valuable, in respect of works to property. Working with a specialist to claim these reliefs can free up valuable cash for use elsewhere in the business.
What are capital allowances?
Capital allowances are a type of tax relief that can be claimed on certain capital assets used within a business, as opposed to any stock that the business is looking to sell.
Various types of relief with different rates are available, with the most attractive being the Annual Investment Allowance or Full Expensing for assets that can be classed as plant or machinery (which enables 100% of the cost of the asset to be deducted from taxable profits in the period of expenditure) and Land Remediation Relief for dealing with certain contaminants (which enables 150% of the qualifying expenditure to be deducted from taxable profits in the period of expenditure).
Common types of assets that can qualify for these forms of relief include:
- Cars and commercial vehicles
- Computer equipment
- Furniture and furnishings
- Machinery
- Certain fixtures within properties
- Asbestos removal
- Japanese knotweed treatment
Who can claim capital allowances?
Capital allowances are a complicated field of tax that require specialist knowledge to navigate successfully. Businesses operated by private individuals, partnerships, or corporate entities are all potentially eligible to claim capital allowances, with some of the most common scenarios being:
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Building, refurbishing, fitting-out, or developing commercial property
You can identify and claim capital allowances on fixtures and fittings when renovating or building commercial property. A capital allowances review should be carried out to ensure that your assets are correctly pooled, any statutory requirements are satisfied, and your claim is robust.
Note that there is no time limit to make a claim in respect of historic expenditure, provided a claim hasn’t already been made and the assets are still owned. We can make sure that your historic position is up to date as well as helping you claim in respect of current and future projects.
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Acquiring or selling existing commercial property
Claims in respect of acquiring properties are more complex than . for claims on works undertaken during your ownership. However, they may still be possible and can help boost your cash flow position further.
Entitlement to claim depends on who the previous owners of the property were, and the dates during which they owned it.
We recommend discussing the possibilities with our specialist team as soon as you are thinking of buying or selling a property, but it can also still be possible to make additional claims in respect of historic property acquisitions. Get in touch to find out more.
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Purchasing assets or equipment for business use
You can claim capital allowances on a vast amount of equipment and machinery. Most trading entities and property investment businesses can benefit from capital allowances in some form. Speak to one of our capital allowance experts early on in any capital investment projects to make sure you take advantage of any capital allowances available to you.
How do capital allowances affect tax?
As shown in the table below, claiming capital allowances can significantly decrease your taxable profits, shrinking the level of Corporation Tax that your company is required to pay. It is important to note, that the most beneficial rates do have a time limit to claim, so exploring a claim sooner can help accelerate the relief you receive.
| Without capital allowances | With capital allowances | |
| Profit before tax | £1,000,000 | £1,000,000 |
| Capital allowances available | – | £500,000 |
| Taxable profit after capital allowances adjustment | £1,000,000 | £500,000 |
| Taxable profit at 25% corporation tax | £250,000 | £125,000 |
The £500,000 allowances shown above could arise from claims made on a combination of property projects or other capital equipment acquisitions.
To read more about specific examples of claims please see our case studies: Claiming tax relief on Furnished Holiday Lets and Optimising tax relief on office fit-outs and refurbishments
Get specialist capital allowance support today
Discover the benefits of capital allowances and boost your cash flow by getting in touch with our specialist team.
Our team has extensive experience preparing claims for a wide variety of assets across many sectors, including:
- Office fit-out and refurbishment projects.
- Industrial unit construction projects.
- Commercial property acquisitions.
- Care home developments.
- Offshore wind farm developments.
and many, many more.
Contact us today to explore how our specialised services can unlock additional savings for your business.
Capital allowances are an area of tax that can have a real impact on your business. As a highly specialist area capital allowances claims are often missed or underclaimed, but a successful claim can have a huge impact on your cash flow, effectively reducing the cost of the investment by 25% or more. Talking through your specific circumstances with our specialist capital allowances team will ensure you are best placed to make sure you aren't missing out on the relief you are entitled to.
Sam Parker-Hully – Capital Allowances
