Capital Allowance FAQs

Frequently Asked Questions

Do you have a questions about Capital Allowance Claims?

In short, Capital Allowances are a form of tax relief given on eligible items of ‘plant and machinery.’ They reduce your taxable profit, and therefore the amount of tax you pay. They are available on embedded fixtures in commercial and some residential property.

Whilst claiming Capital Allowances on the movable items, (machinery, vehicles, etc.) is nothing extraordinary, many are unaware they are also entitled to claim a proportion of the purchase consideration of a property. This is allowed because the purchase expenditure is deemed to have partially been for the fixtures in place at the time.

Most Accountants provide some form of Capital Allowance advice. However, because the tax system is vast, General Practice Accountants are very unlikely to be a specialist within every area of tax. Much like General Practice Doctors wouldn’t be expected to conduct heart or brain surgery.

In order to maximise the Capital Allowances you can claim, we possess a specific skillset (which include Chartered Accountancy, Tax Advisory and Chartered Surveying) with a far more detailed and up-to-date understanding of Capital Allowances.

Therefore, general firms of Accountants (apart from some larger firms), will seek specialists like us to handle this area for them.

Working alongside your Accountants will ensure a positive outcome, and your Accountant will be able to sign off our work before it is submitted to HMRC.

If you are a UK taxpayer or have a company registered in the UK which owns commercial property anywhere in the world, there is a very good chance you could be due a sizeable tax benefit due to unused Capital Allowances within the property.

There are absolutely no upfront costs or hidden fees. Our fee will only become due once we have completed our work and produced our report showing all previously unclaimed Allowances.

We only charge as a percentage of the Allowances that we find. We feel it is the best and fairest way to work with our clients.

Should we discover that no Capital Allowances are available, we will close your file and no fee will be due, regardless of the work undertaken up to that point.

No, claiming Capital Allowances will not increase your Capital Gains Tax bill on a property.

There is a distinction to be drawn between the moveable furniture & equipment which are separate items to the building and embedded plant & machinery (fixtures & fittings) which are fixed to the building.

The embedded plant is not removed from the building and therefore not allocated separately in the accounts. The introduction of the Capital Allowances into the pool or pools is therefore a tax concern and not an accounting consideration. The accounts are not amended, the only change is to the respective pool or pools where the Plant & Machinery Allowances are introduced.

There is no time limit as to how far you can go back, however, this relief is driven by cost, not by the current value. There are other limitations in regard to when the property was purchased, however, it is always worth us looking.

Usually your Accountant will claim on everyday loose items of plant such as computers, desks, chairs, etc. However, most accountants will not have the necessary skillset or resources required to form a ‘just and reasonable’ apportionment of a property’s purchase price and place values on the qualifying items of plant within. STax, on the other hand, have a far more detailed understanding of Capital Allowances legislation and carry out a detailed on-site survey of your property to help maximise your claim.

The type of items that you can expect to claim on are generally anything that is screwed, glued or embedded to the structure of the building. Such items include all electrical cabling, general lighting, security installations, heating systems, lifts, plumbing and sanitary ware, amongst others.

Yes. In our experience, it can still be worthwhile identifying Capital Allowances, especially if a taxable profit is expected in the near future.

There are situations in which Capital Allowances will not yield an immediate return. However, they can sometimes be used to offset Capital Gains Tax liabilities, surrendered to group companies, passed on to new owners and more, which can be a fantastic selling point to the right buyer should you desire to sell in the future.

Everybody’s circumstances are different, and we would always recommend talking to us so that we can carry out an appraisal and provide advice.

The Special Rate Pool relates to ‘Long-Life’ items. These are typically expected to last approximately 25 years. Items such as cold water systems, general lighting, general power, hot water systems, ventilation, lifts and escalators and solar panels.

You will receive an invoice with our fees a week from the date we issue the report. The fees are on 30 day terms.

At the point of issuing the report HMRC has not yet seen our findings. You would need to send the report to your accountant for submission to HMRC as an attachment to the relevant period tax return. When you submit the report, HMRC normally processes the claim and only contacts you if they have any questions regarding a specific item in the report. STax will assist in resolving it with no further charge to you.

The Capital Allowance Claim is not a pound for pound rebate from HMRC, it reduces your taxable profits on which your relevant percentage of corporation tax is applied. Sometimes this can result in a rebate from HMRC, but it is entirely dependent on your individual circumstances and tax paid to date.

For a property to qualify as a furnished holiday let the following criteria needs to be met:

  • The property must be available for letting for 210 days a year; and
  • It must be let for 105 days a year (the let days test); and
  • The property must not normally be let for periods of more than 31 consecutive days to the same person.