Making Retrospective
Capital Allowance Claims

The Myth of the Deadline

A common misconception among accountants is that capital allowances can only be claimed in the year of expenditure. This is simply not true. As long as the business still owns the qualifying asset, a claim can be made at any time.

This opens up significant opportunities for clients who may have purchased or renovated property years ago without claiming the allowances they're entitled to.

Two Approaches to Historical Claims

When claiming for past expenditure, you have two main approaches:

1. Retrospective Claim (Current Year)

Claim the allowances in the current tax year based on the original capital expenditure. This reduces taxable profits now without needing to amend prior returns. This is the simplest approach and often the most practical.

2. Amendment of Prior Return

Go back and amend the tax return for the year in which the expenditure occurred. This may result in a tax repayment from HMRC but is more complex and subject to time limits.

Time Limits to Consider

• Standard Window: Normally 4 years from the end of the relevant tax year
• Discovery Assessment: HMRC can assess beyond the standard window in certain circumstances
• No Limit While Owned: A current-year claim has no time limit as long as the asset is still owned

When to Use Each Approach

Use retrospective (current year) claims when:

• The client has ongoing taxable profits
• You want a simple, low-risk approach
• You're within the current tax year or have profits to offset

Use amended returns when:

• The client has suffered losses in subsequent years
• You want to claim a repayment from HMRC
• There are significant savings at stake

What Qualifies for Retrospective Claims?

Any capital expenditure that would have qualified for capital allowances at the time can potentially be claimed now, including:

• Property purchases with embedded allowances
• Leasehold improvements
• Renovation and conversion costs
• New build construction costs

Evidence You'll Need

To make a retrospective claim, gather whatever documentation you can:

• Original purchase invoices
• Builder and contractor invoices
• Architect or surveyor reports
• Property surveys

If original documentation is unavailable, a specialist surveyor can often reconstruct the expenditure through their expertise.

Related Topics

• Understanding Embedded Allowances
• Section 198 Elections — Property transaction rules
• Talking to Clients About Tax Savings — Starting the conversation
• Back to Accountant's Guide