the captical allowances

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Our Latest Publications

Our Latest Publications

Capital Allowances: Transactions and Planning 2014/15

RICS Black Book Guidance Note

Other Books and Press Articles
Publications from The Capital Allowances Partnership Limited

Our Publications

Books

Press Articles

Frequently Asked Questions (FAQs)

Below are answers to some of the questions we're asked most frequently. Click on a question to be taken to the answer, and then "Back to Top" to return here.

Didn't find an answer to your question? Send us a message using the form opposite.

Will claiming capital allowances reduce the value of my properties?
 
No.

Capital allowances are a right, not a privilege, and are not taken into account when property is valued for commercial or accounting purposes.

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Will claiming capital allowances increase my capital gains tax liability if I sell the property?
 
No.

The tax legislation and published HM Revenue guidance are very clear that capital allowances will not increase a capital gain.

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I bought a property but the price was allocated in the contract between different assets. Should my capital allowances be based on this?
 
No, this is a common misconception.

In fact capital allowances law is clear that contract allocations should not be used and are not binding on the parties or HM Revenue. Instead, a 'just and reasonable apportionment' is usually required. This is a specialist valuation exercise that we are very experienced at preparing.

Alternatively, in some circumstances, and subject to complicated technical conditions, an amount may be agreed with the seller, but from experience this generally undervalues the capital allowances so is a costly approach to follow.

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I bought/built/refurbished my property several years ago, but have not claimed capital allowances (or suspect I may have under-claimed). Can I claim the missed allowances now?
 
Yes.

It is possible to claim capital allowances in any later year's tax return, as long as the assets are still owned in that later tax year.

Even if you cannot find all the paperwork to prepare and support your capital allowances claim, our specialist skills mean we can often proceed successfully without this, and we are highly experienced at doing so.

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I don't have sufficient taxable profits to benefit from capital allowances. Should I bother with them?
 
Yes. In our experience it is always best to identify capital allowances qualifying expenditure promptly.

Firstly, you may have other income, or profits elsewhere in a group of companies, that the capital allowances can be set against. And secondly, when you become profitable and have used all your carried forward tax losses, then the capital allowances will be invaluable.

Many allowances can also be 'disclaimed'. This means identifying and agreeing the amount qualifying for tax relief up-front, but choosing to defer claiming the relief until it is actually needed.

However, many times we have seen businesses short-sightedly failing to claim capital allowances because they are loss-making, and then not claiming in later profitable years when they need the relief.

This usually happens because the business cannot remember, or is even not aware, that it spent the money on qualifying assets in the past. Or it may be because it cannot find the records it needs, or the personnel involved are no longer around, so it believes that it will be impossible to claim (this is not true, and we are highly experienced at agreeing claims in these circumstances).

We have also seen taxpayers selling or disposing of qualifying assets (eg, stripping them out during refurbishment works) before getting round to claiming the allowances, but finding that they cannot claim because they no longer own those assets. And we have seen companies that are being bought/sold failing to get a clean bill of tax health during due diligence enquiries because their capital allowances claims are inadequate.

Also some related tax reliefs provide loss-making businesses with a cash payment from HM Revenue of up to £250 for every £1,000 spent (ie, land remediation relief and research and development tax credits for SMEs). These boost cash flow and can provide smaller or start-up businesses with valuable funding.

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If I sell the property, will I lose all the capital allowances?
 
Only if you fail to obtain expert capital allowances advice. We suggest you should talk to us - we can help.

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Can landlords claim capital allowances for residential property, such as buy-to-let houses of multiple occupancy (HMOs), student houses or cluster flats?
 
In the majority of cases the answer is "no". Capital allowances statute expressly prevents landlords from claiming capital allowances for any plant or machinery let in a "dwelling-house". In the published view of HM Revenue & Customs (HMRC), residential properties with shared amenities (such as buy-to-let HMOs, student houses or cluster flats etc.) are dwelling-houses in their entirety. Therefore, no capital allowances are available for plant anywhere within these properties.

A taxpayer making an inappropriate claim for allowances could not only see that claim rejected, but could also be charged interest and penalties, up to 20 years after the initial claim has been made and seemingly accepted by HMRC.

It is possible to claim some allowances for "traditional" blocks of self-contained flats. In these circumstances the larger building contains a number of separate dwelling-houses (ie, each self-contained flat). Therefore, parts of the larger property (eg, halls, corridors, landings and stairs etc.) fall outside the demise of the dwelling-houses. So capital allowances may be claimed for landlord's plant in those communal areas (eg, lifts, fire detection and warning equipment etc.).

For more information read our article on Residential Capital Allowances.

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I am a property developer/trader (not an investor), can I claim any capital allowances?
 
Capital allowances are generally not available to property traders (ie, owners whose motivation and intention is to add value and sell property on in the short to medium term, rather than hold onto it longer-term as an investment). This is because in tax law a trader's properties are trading stock and the expenditure is 'revenue' (typically recorded on the balance sheet as a 'current asset'), not 'capital' (ie, recorded on the balance sheet as a 'fixed asset').

Capital allowances are intended for capital expenditure.

However, it is possible for traders to claim capital allowances for properties that are genuinely held as an investment (it does not normally matter if this intention changes and the property is later sold).

Companies may also be able to claim land remediation relief for money spent cleaning-up contaminated development land or buildings.

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Are you an HM Revenue & Customs (HMRC) "approved" company, or a member of HMRC's "pre-survey approval scheme", or do you have an HMRC "licence" to make capital allowances claims?
 
There is no such thing! Some new entrants to the market have been making sales claims like these but they are simply not true. HMRC is understood to be aware of this issue and looking into the practices of agents making such statements.

Our team is professionally qualified. As appropriate, our team members may be Fellows of the Institute of Chartered Accountants in England and Wales (ICAEW), Members of the Chartered Institute of Taxation (CIOT), Fellows or Members of the Royal Institution of Chartered Surveyors (RICS) or Members of the Association of Taxation Technicians (ATT). We observe and act in accordance with the regulations and ethical guidelines of these professional bodies.

The Capital Allowances Partnership Limited is regulated by the Royal Institution of Chartered Surveyors.

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Send us a Message...

Give us a Call...

London and the East Midlands:-

Martin Wilson

Telephone: 0116 241 4148

Mobile: 07799 473 562

West Midlands, South West & Wales:-

Adam Garrad

Telephone: 0121 354 1338

Mobile: 07799 473 561

The East and South East:-

Steven Bone

Telephone: 01353 675 224

Mobile: 07880 711 368

The North, Scotland and Ireland:-

Steven Burchill

Telephone: 01506 811 561

Mobile: 07799 473 566

Our Latest Publications

Our Latest Publications

Capital Allowances: Transactions and Planning 2014/15

RICS Black Book Guidance Note

Other Books and Press Articles
Publications from The Capital Allowances Partnership Limited

Our Publications

Books

Press Articles