Andrew Stanley of Stanley Tax Assosciates (STax) recently hosted a seminar on capital allowances with Professional Fee Protection (PFP). This Seminar was presented with guest speaker Chris Bridges, head of sales at PFP.
During this seminar, Andrew touched upon some of the key areas surrounding capital allowances, including:
What are Capital Allowances?
Capital Allowances are a form of tax relief given on eligible items deemed as ‘plant’ and ‘machinery’ in commercial properties and furnished holiday-lets. These include ‘loose plant’ items such as furniture, and also extend to integral features such as electrics and heating. As these items are part of the purchase-valuation of the properties they are in, they can be claimed back as Capital Allowances. These in turn reduce property-owners taxable profits, thus, the amount of tax they pay.
With a furnished holiday let valued at £500k, owners can expect to receive as much as 25% of the purchase price – or £125k – in Capital Allowances. This could provide as much as six-years worth of tax-free profits.
During Andrew’s seminar, he outlined what types of properties are eligible for Capital Allowance claims. These are:
These are properties intended to generate profit such as through business activities. These include but are not limited to shopping centers, office buildings and manufacturing shops.
Communal Space in Residential Units
True communal spaces in residential units such as hallways are eligible for Capital Allowances through fixtures such as plumbing. Areas used by tenants, however, are not eligible for such relief.
Furnished Holiday Lets
Furnished Holiday Lets – or FHL’s – are furnished properties which are commercially let and intended for profit. These properties must be in the UK or the European Economic Area (EEA) and let for at least 105 days a year. You can read more about what qualifies as an FHL here.
Andrew Stanley took time to explain the process STax follows to give clients the highest return on Capital Allowances as possible, this is:
The first step in the process is to trace eligible buildings tax history back to 1996 – this is to quantify and verify if there are any restrictions or pre-agreements which may affect the due process.
The second-stage of the process is to survey properties to identify what items are eligible for Capital Allowances – our specialised team of chartered surveyors will spend approximately one-to-two days on site for larger properties.
Once the survey has been completed, calculations are made at STax’s offices to quanitify the make-up of the property and value of identified items.
After details have been analysed, a report is issued to clients detailing what items were found and where they were found – including photo’s and calculations detailing the value of such items. This report is attached to clients tax returns which are sent to HMRC.
This process takes an average of 2-3 months to complete. For this reason, we recommend clients act sooner rather than later. If you would like to discuss how STax help deliver Capital Allowance gains, feel free to contact us here
During Andrew’s seminar, he also touched on recent changes to legislation on Capital Allowances. This includes pooling and fixed value requirements which were introduced in 2012/14. To find out more about updated tax legislation, click here.
If you’re a property owner and would like to know more about how STax can help your business, contact us for a free consultation here