Whilst most accountants and many business owners understand about claiming capital allowances on loose plant items such as tables, chairs and fridges, capital allowances are often overlooked on “fixed plant” such as electrical and heating systems.
According to research by Deloitte, 96% of owners have not taken advantage of the available allowances, losing out on an estimated £70bn to £80bn.
From 6 April 2014 (1 April for companies), if you haven’t identified all available allowances before you sell a commercial property, included them in a capital allowances computation and notified HMRC, all allowances are lost forever, for the seller, the buyer and any future buyer. Commercial properties that are sold without capital allowances will be less attractive to a future buyer and will therefore have a depressed value as a result.
Somewhat surprisingly, when these changes were announced as part of the 2012 Finance Act, the Government didn’t set a deadline of April 2014 for all retrospective capital allowances after that date. However, once a property has changed hands after April without the issue being addressed, it will be too late.
As a guide, if a property is worth £1m, there could be £250,000 worth of assets available for tax relief. Over time, this would be worth £100,000 to a 40% income tax payer and at least £50,000 to a company.
If you or your business owns a commercial property and you would like a capital allowances review, please get in touch.
David Robinson, Tax Consultant