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Research has shown that nine in 10 owners of UK commercial property will be due a rebate because of unused capital allowances. Properties such as hotels and nursing homes typically contain fixed plant of between 20% and 35% of the purchase price. This can make a massive difference to a business’s tax bill as to whether these “hidden” allowances have been claimed or not. Whilst loose items such as white goods and carpets are usually claimed, it is the fixed items such as heating systems, air conditioning systems and electrical systems that are often missed.
Whilst with commercial property transactions since April 2012, the buyer and seller have to agree the amount qualifying for capital allowances, it remains possible to review properties bought before April 2012 and claim capital allowances now if this was missed at the time of purchase – a fact often overlooked. Moreover, even on post April 2012 deals it is still currently possible to claim capital allowances on the “apportionment” basis when the previous owner hasn’t claimed.
For example, with a hotel costing £1 million, an average capital allowances claim, properly conducted, would be around £270,000, which for a 40% taxpayer represents a £108,000 tax saving over the life time of the business compared to a nil claim. A significant proportion of this can result in an immediate tax repayment depending on the tax situation of the business.
Capital allowances can be claimed on any commercial property where the owner is a tax payer. Some types of commercial property are more plant intensive than others.
At Armstrong Watson we work with local surveyors in order to maximise capital allowance claims on behalf of our clients.
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