As a property owner, it is quite easy to have many capital expenditures which is why it is so vital to stay updated on capital allowances on commercial property and buildings so that you can maximise your tax savings.
A capital allowance is a tax credit benefit that is claimable against expenditure on property and plant and machinery equipment used for business purposes. It is usually overlooked or underappreciated by property owners even though the tax benefits you could be eligible to claim from commercial property are significant.
How Do You Know If You Are Eligible To Receive Capital Allowances On Commercial Property & Buildings?
There is specific criteria to meet for the property owner to be eligible for claiming capital allowances on their property. The criteria to meet are as follows:
- The property must be owned by a UK taxpayer, whether they are an individual, partnership or company.
- The property must be a commercial property
What Qualifies As A Capital Expenditure?
Qualifying capital expenditures are the items that are named plant and machinery equipment used for business purposes. Capital expenditures may qualify for capital allowances that can be claimed by the owner of the property for the cost of the asset.
Qualifying Properties For Capital Allowances
- Holiday Lets
- Offices
- Nursing Homes
- Hospitals
- Hotels
- Banks
- Residential Properties (Houses & Apartments)
- Factories
- Shopping Centres
- Nurseries and Schools
- Restaurants
Qualifying Capital Expenditure For Capital Allowances
- CCTV
- Heating Systems
- Lighting Systems
- Air Conditioning Units
- Escalators, Lifts Or Other Accessibility Installations
- External Solar Panelling
- Carpets In Shared Hallways
- Demolition Costs (If the property is question in an asset)
How Long Do I Have To Apply For Capital Allowances On Comercial Property?
The period to submit a capital allowance claim on a property is available for all qualifying expenditures historically. This means that capital allowances are still claimable on any assets that come under qualifying expenditure that you still own.
Why Are So Many Capital Expenditures Missed When Calculating Capital Allowances On Property?
There are many reasons why capital expenditure can go unclaimed when calculating capital allowances claims. For example, when a property is acquired the inventory usually only includes movable items but details of property fixtures are not often provided within a simple inventory and therefore can go unclaimed.
Invoices for property alterations, maintenance and improvements are often too vague. Therefore any expenditure that would qualify for capital allowances often goes unnoticed.
There is also very complex legislation around capital allowances on property and buildings and it can be applied vastly which makes it very difficult to work out what installations qualify for capital allowances and which do not. Most property owners choose not to take the risk and therefore items remain unclaimed.
Tax specialists such as CapEx Tax can help you to work out what you can and cannot claim for so whether it is capital allowances on furnished holiday lets or capital allowances on commercial property, or if you are wondering whether you can claim capital allowances on windows or solar panels get in touch today and let us advise you how to proceed with your capital allowances claim. We can help you to ensure that your claim is accurate and eligible to be accepted by HMRC so you don’t have to worry about your claim being rejected.
Structure And Buildings Allowance
Alongside other types of capital allowance rates such as the first-year allowance, writing down allowance and full expensing, there is a structure and building (SAB) allowance.
SABs are given for the construction costs of commercial property at a flat rate of 3% per year (or 2% per year before April 2020) on a straight-line basis for 33 years and 4 months.
The expenditure must be incurred on or after 29th October 2018 and is available for UK taxpayers for commercial buildings and structures in the UK or overseas.