Capital Allowances

If you own commercial property and are a UK taxpayer, our specialists are likely to be able to reduce the amount of tax you pay.

Lowering your tax liability

Individuals and businesses owning commercial property can potentially save significant amounts of UK income and corporation tax through capital allowances.

Capital allowances are an entirely legitimate, recognised part of the UK tax regime. Unlike many HMRC reliefs, capital allowances allow tax relief to be given or denied by statutory principle (Capital Allowances Act 2001), rather than by virtue of accounting standard.

Some of the rules on capital allowances are very complex – even for trained professionals. Claiming this relief requires a variety of expertise including; legal, taxation, accounting and valuation.

What are capital allowances?

A capital allowance is the unit used by HMRC to measure depreciation (wear and tear) of an asset. The current legislation governing the use of capital allowances is the Capital Allowances Act, 2001. Commercial property owners are allowed to claim capital allowances on inherent plant & machinery within their commercial buildings as a statutory exemption.

The typical value of a capital allowances claim:

On average, a capital allowances claim undertaken by us results in you receiving a tax saving of over 6% of your portfolio’s purchase consideration. The value of the tax saving is affected by the types and sizes of buildings being claimed upon as well as the effective tax rate of the legal owning entity. To download our Commercial Property Tax Saving Information Guide, click here.

At CPA, we provide specialist capital allowances services to our clients who include:

  • Commercial Landlords (Private & Corporate)
  • Accountants
  • Commercial conveyancers & solicitors
  • Private Bankers & Wealth Managers

Any business or individual owning, building or refurbishing commercial property can gain significant value from claiming capital allowances.

The value of capital allowances varies according to the nature of the property and are typically relevant for buildings such as:

  • Office Buildings
  • Industrial Buildings
  • Hotels and pubs
  • Care homes and Supported living premises
  • GPs, dentist and physiotherapy practices
  • Retail units
  • Furnished Holiday Lets

We prepare and deliver fully disclosed capital allowances reports on commercial properties in a HMRC-compliant format.

Any property or construction transaction could be an opportunity to claim capital allowances. Once a claim has been made, steps must be taken to protect your benefit even if you plan to dispose of the property or asset.

Key service lines include:

  • Property purchases and disposals
  • Refurbishment projects
  • Construction and development projects
  • Land remediation
  • Research and Development
  • Legal documentation drafting

Surely my accountant will have already dealt with my relevant capital allowances claims?

There is a very high possibility that your accountant will have only submitted claims for expenditure on the most obvious lower value items such as carpets, curtains, fire extinguishers etc. Specialist legal, surveying and accounting expertise are needed to be able to successfully make a capital allowances claim as when a building is purchased, there are no receipts passed on for the integral features. We work directly for property owner-occupiers and investors alongside their accountant to maximise their tax savings.

I bought my property several years ago. Can I still claim?

As long as you are still in ownership of the property, there are no issues claiming on older purchases. If you have bought or sold any commercial property in the last 10 years, contact us on 020 7725 9944 or email: enquiries@cpatax.co.uk.

How will capital allowances benefit me or my business?

Whether you are profitable or not, it is always advantageous to identify capital allowances on qualifying expenditure for the following reasons:

Capital allowances may result in significant tax rebates from HMRC.

If you are profitable then capital allowances can be offset against other income or profits possibly even across other companies in your group (if applicable).

If you are not profitable, in certain cases, it is possible to defer the reliefs until they are required.

Is this a tax scheme?

No. It is a statutory exemption, written in law under the Capital Allowance Act 2001 and is a legitimate form of tax relief for commercial property owners.

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