One under-claimed financial saving that commercial property owners don’t utilise enough, is capital allowances.  Often it is overshadowed by immediate concerns like location or square footage, however, whilst these allowances may seem like mere financial footnotes, they play a pivotal role, especially when you’re buying or selling commercial properties.

Understanding the Basics

Before delving into how capital allowances impact commercial property transactions, it’s essential to understand what they are. In essence, capital allowances provide tax relief for businesses based on the tangible assets they purchase and use. These could range from integral features within a building, such as heating or security systems, to external structures and renovations.

Capital Allowances When Purchasing

1. Immediate Financial Relief: For investors and business owners, acquiring a commercial property can be capital-intensive. Capital allowances, particularly the Annual Investment Allowance (AIA), can offer immediate relief, allowing you to offset a significant portion of an asset’s cost against taxable profits.
2. Negotiation Leverage: Knowledge about potential capital allowances can be a bargaining chip. The seller might not have fully utilised all available allowances, leaving room for negotiations.
3. Future-Proofing: Properties with built-in, eligible features for capital allowances can offer long-term tax relief, making them more financially attractive in the long run.

Capital Allowances When Selling

1. Maximising Property Value: By ensuring that all capital allowances associated with a property are identified and claimed, sellers can present a more attractive financial proposition to potential buyers.
2. Smooth Transactions: An understanding of capital allowances can streamline sales, especially if the buyer is keen on these tax reliefs. Providing a clear record of claims can simplify the due diligence process.
3. Avoiding Pitfalls: Once a commercial property is sold without having claimed all possible capital allowances, some of these allowances might be lost forever. Being proactive ensures that you don’t leave money on the table.

Strategic Considerations for Both Buyers and Sellers

• Engage Experts Early: Whether buying or selling, involve a capital allowances specialist at the outset. Our insights can be invaluable in ensuring maximum benefit.
• Due Diligence is Key: Buyers should not take capital allowances claims at face value. Engage in thorough due diligence to understand the full scope of potential claims and any associated risks.
• Stay Updated: The landscape of capital allowances is continually evolving, with legislative changes and court rulings. We can help you review your property portfolio to identify any opportunities for claims.

In Conclusion

Capital allowances, while seemingly a niche aspect of commercial property transactions, can significantly sway the profitability and attractiveness of a deal. As with all nuanced areas, knowledge is power, or more importantly, financial savings. Equip yourself with the right insights and our expert advice, and let capital allowances be a strategic tool in your commercial property decisions.

Get in touch

If you want to find out more about capital allowances or make a claim, you can contact Salman or Babar at: