Making the most of Capital Allowances

Capital Allowances are a tax relief triggered by the purchase of a new commercial property, or when expenditure is made on an existing property.  Capital Allowances are primarily available when buying plant and machinery such as heating and electrical systems, air-conditioning or lifts etc. 

When a property is being bought and sold, new rules require there to be a record of the agreement between the buyer and seller setting out the distribution of the Capital Allowances available in relation to the property between the two parties to the sale. 

From a seller’s perspective it is important to retain as many of the allowances as possible in order to maximise the tax relief claimable following the sale, or to avoid any claw-back of tax relief previously claimed by HMRC. From a buyer’s point of view, it is important to try to claim as many allowances as possible in order to make the most of tax relief available post completion.  

Failure to deal with this aspect of a property transaction by either party could result in significant tax reliefs being lost and it is important, now more so than ever, that expert advice is taken prior to exchange and completion.

In addition, many people will be unaware that Capital Allowances are also available on the conversion of first floor premises into flats where they are above ground floor shops and also on monies spent on furnished holiday let accommodation.

In short whilst the rules on Capital Allowances are  complex, if the appropriate advice is taken, significant tax reliefs may be available for commercial property owners and investors.

If you would like further advice on this subject please do not hesitate to contact our Business Legal Services Team at Banner Jones.