Every commercial property owner knows that capital allowances are a very valuable form of tax relief.
However, Midlands law firm Else are calling on portfolio holders to identify and claim any allowances available. And do it now.
Due to new legislation, which came into force in April 2014, commercial property owners could lose any unclaimed allowances when a building is sold. This includes the seller, the buyer, and any future owners of the property.
Our commercial property solicitors in Burton on Trent, are experts when it comes to buying and selling property.
Read their explanation of capital allowances and find out what you should be claiming for.
What are capital allowances?
Fixtures and equipment within a building can add up to a significant proportion of the total value of the property. And, therefore they can be a significant source of tax relief.
Capital allowances can be claimed on all the fixtures within a specific building. Allowances of 8% pa can be claimed for items that are classified as an “integral feature” of the property. That can include air conditioning, lifts, escalators, water heating systems, and lighting.
It is also possible to claim for fixtures such as kitchen and sanitary equipment. These items qualify for allowances of 18% pa, calculated on a reducing balance basis to take into account depreciation over time.
Many property owners have not taken advantage of these allowances. It is estimated that billions of pounds worth of potential tax savings go unclaimed each year. Don’t miss out.
Non-taxpayers
There are some exceptions. Because capital allowances are a form of tax relief, they cannot be claimed by property owners that do not pay any UK tax. This can include charities, local authorities, and pension funds.
However, even tax-exempt buyers who cannot claim capital allowances would still be wise to look into the future situation regarding capital allowances, because this information will become important for any potential future sale.
Being prepared is key
If you are a potential buyer, it is advisable that you find out about the seller’s capital allowance position. You must do this as soon as possible in order to preserve the potential to make claims.
Property portfolio holders are advised to keep extensive records of the fixtures within each specific property.
This can be a complex issue, but with the right advice you can avoid all manner of difficulties and complications arising in future.
Else have a strong reputation within the sector. If you are a portfolio holder, or looking at the purchase of a commercial property, you need to seek our advice as soon as possible.
For more detailed legal advice about your property issues, please contact our teams of commercial property solicitors in Burton on Trent on 01283 526200. Alternatively you can send us a message and we will get in touch at a time that suits you.