Capital Allowances – Reduced tax bills for HMO owners?

by Property 118

15:01 PM, 9th May 2013
About 7 years ago

Capital Allowances – Reduced tax bills for HMO owners?

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Capital Allowances – Reduced tax bills for HMO owners?

Calculator on refund formPart 1 of 2 written by Bill Loryman

HMRC calculates that over 90% of properties have not claimed against their Capital Allowances. Recent changes by HMRC still mean that Capital Allowances can be claimed against the Plant and Machinery (such as fixture and fittings) or assets within the ‘non-dwelling areas’ of your property. These can be used to obtain a tax refund or to reduce your current year’s tax liability.

If you own a House in Multiple Occupation (Multi-let / HMO’s / Student lets), it is very likely that you are entitled to unclaimed Capital Allowances for the communal (non-dwelling) parts of your investment property and many of the associated fixed assets.

Capital Allowances have been around since 1878, yet they are almost never claimed, or often claimed incorrectly. In fact HMRC have said that over 90% of eligible properties have not claimed the tax that is due. Is your investment property one of them?

Anyone who has an investment property is entitled to claim these allowances.
•Key Worker accommodation
•Dentists / Doctors shared properties
•Student Lets
•Multi-Lets
•Professional Lets
•Licensed and unlicensed HMO’s
•Holiday Lets (UK & EU)

Capital Allowances – what are they?

They are Plant & Machinery allowances that relate to the tax relief associated with certain qualifying items, such as fixture and fittings or assets within the ‘non-dwelling areas’ of HMO, multi-occupancy properties and student lets/ halls of residence.

In each year that you buy a property, you can deduct up to £250,000 of your capital outlay (purchase cost) associated with these non-dwelling areas. Once these items have been identified, valued and documented, you can reclaim previously paid Income tax, reduce your current year income tax liability, or roll forward the allowances until such time when they are required. This is unlike normal rental losses which can only be rolled forward until such time that the property makes a profit, Capital Allowances claimed on the property, are ‘set-off’ against any income stream.

Part 2 will include details of who might be able to claim and the process.

Bill Loryman is the Managing director of HMO Tax Limited and has 20 years experience in the property world involving franchising, licensing, acquisitions and property development.



Comments

Bill Loryman

15:16 PM, 10th May 2013
About 7 years ago

To Joe blogs,
Our standard terms include the no claim-on fee arrangement, we have a 100% success record with the HMRC. We only charge a small percentage of the savings
identified by our surveyor and there are never any costs to our clients if we do not
proceed with a claim.
Bill loryman

sam

12:41 PM, 11th May 2013
About 7 years ago

Bill

We are about to embark on a major refurbishment program for a 5 storey 10 flat 1959 building which we bought over the last 3 years - including 2 this year - plus erecting a penthouse on top of the building.

Is tax planning for this kind of project within your realm of expertise ?

Badger

20:09 PM, 13th May 2013
About 7 years ago

Bill - what is a "small percentage" please?

(I hate it when businesses get coy about their charges. leaves me wondering whether there is something to hide - which it often turns out there is... with apologies, naturally, if this is not you. 🙂 )

Bill Loryman

7:01 AM, 14th May 2013
About 7 years ago

Most certainly. Getting involved in the planning sage means you can maximise your ECA(enhanced capital allowances) and there may be opportunities to claim LRC(land
reclamation relief) if there is contamination present as well as the regular Plant & Machinery Allowances. Our in-house surveyors will be able to asses the details from a site visit but please call me so I can take details and provide a no obligation illustration of the likely tax savings for your project.

Bill Loryman

7:10 AM, 14th May 2013
About 7 years ago

The percentage charges are based on the value of. the Capital Allowances we identify for you. Usually between 4.5 to 7% and vary slightly depending on our work involved. Our fees are always made clear in the illustrations of the tax savings we provide for each client. and are paid out of the savings made. We have a 100% track record of successful claims with the HMRC.

Mark Alexander

8:26 AM, 24th May 2013
About 7 years ago

Hi Bill

There are a few questions on Part 2 on this blog which you may wish to take a look at please. See >>> http://www.property118.com/capital-allowances-tax-savings-for-hmo-and-multi-let-owners/39540/

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