Capital Allowances
Claiming Capital Allowances
Most business owners understand that business assets depreciate. However because depreciation is shown as an expense in their accounts they are often under the impression they are receiving tax relief for this. In reality depreciation is added back into the net profit before taxation is applied. Therefore what the business owner has to do is claim capital allowances in lieu of depreciation to obtain a tax benefit. This can be easy for the accountant where the asset is a car or computer or other piece of machinery but with property expenditure not all expenditure qualifies for capital allowances. Therefore a specialist like ourselves is required to undertake the work in accordance with the prevailing legislation and any legal precedents which emerge from the First Tier Tax Tribunal.
When purchasing / developing / or building a property there are many "fixtures" such as the heating and electrical systems, sanitary ware, hot and cold water systems, fire alarm, CCTV etc. That have a value for capital allowances purposes. Generally for £1m of expenditure it is possible that £250,000 or more may qualify for capital allowances. The Government are currently allowing up £1m of capital allowances to be claimed in the year the expenditure is incurred. £1m of capital allowances is equal to a potential tax saving of £190,000 over time (assuming a 19% corporation tax rate).
With purchases our involvement ensures the purchase contract includes the relevant clauses to protect the purchaser's interests. This is because in many cases the co-operation of the vendor is required after completion to help maximise any potential capital allowances claim. Commercial conveyancing solicitors were advised in April 2014, by the Law Society, to direct their clients to capital allowances claims specialists, such as ourselves, to give advice. Sadly it is our experience many solicitors have failed to do so.
FREE Advice Available
We are always available to give advice by email or over the phone and any initial consultation is free of charge. Normally we only charge our fees after the capital allowances claim has been completed and forwarded to the client. We also deal with any enquiries from HMRC should they arise.
Call us for more info
03333-445393
Time Scales
Currently from the date a client signs our engagement letter we are quoting delivery of the completed claims report within approximately ten to twelve weeks. We can often deliver reports in a shorter time-frame if absolutely necessary. Obviously our timescales can sometimes be affected by the time taken by owners and their accountants to produce cost information etc. On average HMRC takes about 8 weeks to provide any relevant tax rebates once the clients accountant / tax adviser has amended their tax returns with the capital allowances figures.
