Capital allowances are, in the broadest sense, a form of tax-approved depreciation for the plant and equipment used in your business. They are, therefore, a highly effective way of reducing your business’s tax liability. With Corporation Tax rates due to rise to 25% from 1 April next year, a claim for capital allowances can provide funding for up to a quarter of your investment cost.
Whilst accountants will be familiar with the basic rules when it comes to plant and machinery used in the trade (such as computers, tractors, packing machinery etc), the rules and regulations are far more complicated and nuanced than many realise when it comes to commercial buildings and property.
Capital allowances can be claimed on fixtures within the property which are plant and machinery that are installed or fixed to a building such that, in law, it becomes part of the building.
Nearly every property contains a substantial number of fixtures such as lighting and heating systems.
However, no capital allowance claim can be made unless the expenditure has accurately been attributed to qualifying categories. There are often grey areas in relation to what qualifies, and many cases have been decided in the courts and tax tribunals over the last 135 years.
The Tax Team at Old Mill have members specialising in helping businesses maximise their capital allowances claims on commercial building projects. Over the past 18 months, we have helped clients save over £840,000 in tax via capital allowance claims.
The key to maximising such capital allowance claims is understanding how the fixtures are incorporated into the building and identifying the associated costs. We will work closely with you and your third-party contractors throughout the project to ensure that claims are maximised and processed through your tax return as soon as possible to achieve tax savings.