Capital Allowances, Structures & Buildings Allowance & Land Remediation Relief

Amongst all the doom and gloom of the Covid-19 crisis, we have been working with our clients, both business and individuals, as normal. Part of this work has been planning and putting contingencies in place, but much of it has been looking at ensuring our clients are receiving the right tax allowances on all aspects of their finance. One particular area we focus on is commercial property.

If you are an owner of a commercial property (which includes mobile home parks and residential care homes) or occupy a commercial property as a tenant for use in your business and are subject to UK tax, you are entitled to claim Capital Allowances on qualifying expenditure incurred towards fixtures, integral features and thermal insulation in the property.  This could result in substantial tax savings for your business thus boosting the cash flow.

Qualifying fixtures include fitted kitchens, bathroom suites, fire and burglar alarms, CCTV systems to name a few.

Qualifying integral features include lifts, escalators, moving walkways, heating systems (for air and water), air-conditioning, air-cooling, purification systems, hot and cold water systems, external solar shading and electrical systems including lighting.

Thermal insulation includes roof lining, double-glazing, draught exclusion and cavity wall filling.

Did you know that: –

  • There is no time limit in claiming the Capital Allowances, you can make a claim as far back as the date you: –
    • purchased the commercial property,
    • incurred expenditure towards extending, altering or refurbishing an existing building,
    • incurred expenditure towards leasehold improvements to a rented property
  • If you have no cost breakdown for expenditure incurred, you can still make a claim for Capital Allowances;
  • If you have an adviser who has already made a claim for Capital Allowances, there may be some expenditure they may not have considered where Capital Allowances are due;
  • If you are a loss making business, a claim for Capital Allowances will still benefit your business – the increase in losses following a claim for Capital Allowances can be carried back to obtain a tax refund for the prior year, or carried forward to offset against future business profits, or in certain cases, you may be able to surrender the loss arising from a Capital Allowances claim to HMRC in return for a payable tax credit, resulting in a cash flow benefit;
  • Even if the previous owner of the property has claimed Capital Allowances, there is still an opportunity to identify previously unclaimed allowances;
  • In addition to claiming Capital Allowances on fixtures and integral features, tax relief in the form of Structures and Buildings Allowance is also available for expenditure incurred on new buildings, extensions/refurbishments and fit-outs of existing premises, where all contracts for construction work were entered into on or after 29 October 2018.
  • Capital Allowances are also due in respect of communal areas of student accommodation lets such as on lifts, fire alarms, lighting, heating and carpets.

Here are a couple of examples of businesses that have benefited from a claim to Capital Allowances:-

  • Car dealership – identified £870,000 of qualifying expenditure on which Capital Allowances were due saving the business circa £174,000 of tax.
  • Commercial property purchase – identified £330,000 of qualifying expenditure on which Capital Allowances were due that had not been claimed by the previous owner saving the business circa £66,000 in tax.

If you are an owner of a commercial property (including mobile home parks, residential care homes) and rent it out or are in the property development trade and have incurred costs towards: –

  • remediation of contaminated land,
  • removal of asbestos from buildings,
  • breaking out buried structures,
  • the treatment of harmful organisms and naturally occurring contaminants such as Japanese Knotweed, radon and arsenic

then you will be entitled to a valuable form of tax relief known as Land Remediation Relief.

Land Remediation Relief can provide tangible cash savings for profit making businesses. If your business is making a loss in the period it has incurred any of the expenditure above, it may be able to surrender the losses for a payable credit from HMRC which could be a welcome cash flow boost.

We jointly work with a specialist who is both a qualified surveyor and a tax technician who adopts a more detailed and forensic approach in identifying Capital Allowances claims for properties.  They would also assist in identifying and making a claim for Land Remediation Relief.  The fees are contingent based on a fixed percentage of the tax savings or payable credit due from the Capital Allowances claim and/or Land Remediation Relief claim and is only chargeable following a successful claim with HMRC.

To find out more, please call us on 020 8863 4566 or contact us.

020 8863 4566