When purchasing a commercial property there are a number of things to consider. From location to facilities, finding the perfect property can be difficult at the best of times. Which is why you may find yourself making moderations or additions to your newly purchased property in order to make it perfect for your needs. But, did you know you can claim a tax relief on such moderations?
Before considering making a claim, use our Capital Allowance Calculator to see how much you would be eligible for.
What You Can Claim On
The claim for capital allowances is limited to a number of items. Particularly, those that come under the label of ‘plant and machinery’. These include:
- Cars – so long as they are used by your business.
- Demolishing costs of plant or machinery left by prior owners.
- Integral building features.
- Kitchen or bathroom suites.
- Building alterations to install certain plant and machinery.
You cannot make a claim on:
- Leased items – you must own the equipment.
- Buildings, doors, gates, mains water or gas systems.
- Bridges, roads or other land structures.
- Entertainment items, e.g. a karaoke machine.
In regards to commercial property, there are a few more stipulations to be considered when it comes to capital allowances. There is something known as a Fixed Value Requirement, which requires the purchase of the property must enter into a joint election with the vendor which agrees on an apportionment of the price. This must be done within two years; but, if the two parties cannot agree to a price they can also appeal to a Tax Tribunal.
The second point is that there is now, as of 2014, a ‘pooling requirement’. This means that Capital Allowances cannot be claimed on fixtures that the vendor did not make a claim for themselves. The subsequent purchaser, and those after can do nothing but be made aware that no allowance can ever be claimed on those fixtures of the property.
If you are unsure whether these two stipulations apply to you, always consult with a capital allowance specialist.
When You Can Claim
In order to claim the full value of Capital Allowances in one go, you must claim in the same accounting period in which you bought the property. Doing so allows you to claim under annual investment allowance or first-year allowances, whereas a later claim would be taken under the writing down allowances.
Claiming as part of annual investment allowance allows you to deduct the full costs from your profits before tax.
Important note: Capital Allowances can only be claimed once in the history of the building! Ensure this process has never been completed prior to making a claim.
For expert advice on how you could identify valuable tax relief hidden inside your commercial property, our team of expert capital allowances experts at Roger Hannah & Co. will be more than happy to help – simply call 0161 429 1662.