Don’t miss out on Capital Allowances

Don’t miss out on Capital Allowances

17:23 PM, 14th March 2023, About A week ago

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After the previous article published on Property 118 regarding Capital Allowances (LINK HERE), it has become apparent that many property owners are currently missing out on significant tax savings, by failing to claim capital allowances on embedded items within their commercial properties, which were purchased either before 2014 or within the last 2 years. This is due to a lack of awareness amongst property owners and accountants about the changes in the Capital Allowances Act in 2014.

Capital allowances are a form of tax relief that allows businesses to claim tax deductions on certain types of expenditure, such as machinery and equipment, incurred while carrying out business activities. Embedded items are items that are part of a building or structure but can be considered as separate assets, such as heating and ventilation systems, lighting, and lifts.

Prior to 2014, capital allowances could be claimed on embedded items if they were identified and valued by a specialist capital allowances company. However, in 2014, the Capital Allowances Act was changed to require that embedded items must be identified and claimed within a two-year window of any commercial property purchased after 2014.

It is therefore essential that property owners and their accountants are made aware of the importance of identifying and claiming capital allowances on embedded items within their commercial properties. This can be done by engaging the services of a Capital Allowances specialist, who will be able to identify any embedded items that are eligible for capital allowances and ensure that they are claimed within the required timeframe.

There are several benefits to claiming capital allowances on embedded items, including:

  • Tax savings – By claiming capital allowances on eligible embedded items, property owners can reduce their tax liability, resulting in significant cost savings.
  • Improved cash flow – Claiming capital allowances can also result in improved cash flow, as owners can receive tax relief on eligible expenditure upfront rather than having to wait for it to be written off over time.
  • Enhanced property value – Identifying and claiming capital allowances on embedded items can increase the value of a property, as it makes it more attractive to potential buyers who are looking for tax-efficient investments.

It is worth noting that there are some limitations to the capital allowances system, such as restrictions on claiming capital allowances on certain types of assets and the need to ensure that the correct procedures are followed. This is why it is crucial to seek advice from a specialist capital allowances company, who will be able to guide property owners through the process and ensure that all eligible items are identified and claimed correctly.

Any property with a trade operating from it can qualify and if you have any of the properties listed below, it is important you speak with a Capital Allowances specialist to see what tax savings you are entitled to.

  • Offices
  • Vets and Animal Care
  • Nurseries
  • Holiday and Residential Parks
  • Hotels and B&B’s
  • Funeral directors
  • Manufacturing/Warehouses/Factories
  • Care homes
  • Self-catering/Furnished Holiday Lets/ Serviced Accommodation
  • Retail Units/Shops
  • Pubs and Restaurants
  • Doctors
  • Education and Training facilities
  • Kennels and Catteries
  • Retailers
  • Dentists

In conclusion, property owners who purchased their commercial properties before 2014 or after April 2020 and have not yet claimed capital allowances on the embedded items should act as soon as possible to avoid missing out on significant tax savings. By engaging the services of a specialist capital allowances firm, owners can identify any eligible items and ensure that they are claimed within the required timeframe, resulting in improved cash flow, tax savings, and enhanced property value.

If you are interested in finding out exactly how much you could save or just want to know more about Capital Allowances in general, please fill out your details below and Property118 will be happy to put in you in touch with a company offering these services.

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