Claiming Embedded Capital Allowances is a right, not a privilege.
A capital allowance is the sum of money a UK business can deduct from the overall corporate or income tax on its profits. These sums derive from certain purchases or investments, outlined in the Capital Allowances Act 2001. A capital allowance is given instead of depreciation for certain types of asset.
Embedded Capital Allowances are pieces of plant and machinery which also qualify for Capital Allowances but may be considered to be part of the building. For example baths, toilets, sinks and air-conditioning.
So who can claim?
Capital Allowances are available on the following commercial property:
- Owner-occupiers (ie taxpayers, trade premises including tenants)
- Investors (ie landlords)
- Furnished holiday lets
You will find ’embedded’ plant and machinery (fixtures, including electrical, water, heating and sanitary systems, plus numerous other resources) in every commercial building. The money spent on these assets may be written off for tax purposes. This then protects the owner’s business or rental profits from taxation) but only if they are valued correctly.
You or your business are eligible to claim if you are the owner of a freehold/leasehold commercial property; the property is used for commercial use only; you’re a UK taxpayer.
Many businesses are losing out on millions of pounds of tax allowances.
Claiming Capital Allowances
Latent tax-benefit in embedded fixtures and fittings is frequently ignored and so estimates reveal that most proprietors of commercial properties simply fail to claim. Tax allowances for commercial building fixtures could be lost to a new buyer and all future owners as a result of alterations to the Finance Act, dating from April 2014. Up to that date, when a property was sold, there had been no requirement for sellers and purchasers to agree upon a single disposal/acquisition-value for the so-called Embedded Capital Allowances within the all-inclusive sales price.
However, this now has to be undertaken at the time of sale, via the CPSE32 enquiries. In addition to identifying the prospective allowances currently unclaimed, we can also counsel Solicitors on how to complete these enquiries.
Below is a chart which reveals the dynamic capacity enclosed within your property: