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3 February 2015
Background
Capital Allowances (CAs) should be at the forefront of all commercial property owners minds. Generally, such claims will be in relation to so-called property embedded fixtures and fittings. In other words, fixtures and fittings acquired with the building and / or certain expenditure on refurbishment of a property.
For more information on CAs generally please contact us.
Summary
It is possible for a valid claim to be made resulting in the benefit of a historic CA claim being offset against two years’ worth of tax liabilities. This may take effect as a repayment from HMRC and / or a reduction in the next years tax bill.
Under general principles, a claim should be made on a ‘real time’ basis. In other words, when it is clear that a commercial property owner acquires a commercial property and incurs expenditure on the property embedded fixtures and fittings.
Planning for 2015/16
As we are now a couple of months away from the 2015/16 tax year you will find some quick tips on making a claim (if you are a property investor) or helping a client make such a claim:
The ‘perfect storm’?
Historically speaking, The Annual Investment Allowance (AIA) is at its highest ever level (£500,000). In the 2015/16 tax year the ‘perfect storm’ for a valuable and attractive CA claim would be for a property purchased in 2013 and 2014.
Why is this a ‘perfect storm’? Well, such circumstances would allow for both a historic claim and the use of allowances of up to £500,000.
For example, an office that was purchased for £250k may have £62.5k of CAs in respect of the inherent fixtures and fittings. These can be written down in full if there is a balance of AIA available.
As such, a CA claim on this bases would be worth £25k, assuming they were 40% taxpayer.