Capital Allowances: The Underutilised Tax Advantage in the UK

May 2, 2024

When it comes to navigating the complex world of tax advantages in the UK, one term that often gets overlooked is Capital Allowances.

These allowances can provide significant benefits to businesses, yet many are not taking full advantage of them. In this blog post, we will delve into the underutilised tax advantage of Capital Allowances and explore why businesses in the UK aren’t exploring them, and why accountants might not be securing the full amount for their clients.


The Unfamiliar Terrain of Capital Allowances

Delving into the realms of Capital Allowances often feels like charting a course through uncharted waters for many businesses. This sophisticated area of tax law, designed to offer businesses a pathway to substantial fiscal benefits, is regrettably bypassed by many due to its perceived complexity and the intricate web of rules that govern it.

Capital Allowances, in essence, provide a mechanism for organisations to write off the cost of qualifying assets—ranging from vital machinery and vehicles to specific commercial property fixtures—against their taxable profits, thereby lowering their overall tax burden.

The crux of the issue lies in the daunting perception of these regulations. This perceived labyrinth of statutory requirements can deter businesses from even considering exploring Capital Allowances. It’s a scenario that sees countless organisations potentially missing out on valuable tax relief, simply because the path to claiming these allowances seems too intricate.

This lack of familiarity is compounded by the fact that the benefits and applicability of Capital Allowances are not universally understood across the business spectrum. A common misconception is that this form of tax relief is reserved exclusively for the corporate giants, leaving smaller enterprises presuming they are ineligible. The reality, however, is far more inclusive and accessible, promising rewards across the board if navigated with expert guidance.


The Role of Accountants in Navigating Capital Allowances

In the labyrinthine of UK taxation, accountants are the seasoned guides that can lead businesses through. Yet, it’s an unfortunate truth that not all accountants are looking at the full picture when it comes to qualifying spend.

Clients might assume that their accountant deals with capital allowances, but they could benefit significantly from being referred to a specialist in capital allowances and other nice tax areas.

Accounts tend to have limited information and time to be able to pick up on potential claims. They are reliant on the client giving them the information, whereas a specialist will approach things differently.

We work alongside accountants to give an all-encompassing view to unlock additional savings and reductions.


How Does a Capital Allowances Specialist Differ from an Accountant?

  • Most accountants will base their capital allowances calculations on a ‘desktop review’ looking at invoices and deciphering which costs can and cannot be included. However, a capital allowances specialist will employ a surveyor to visit the business premises so that detailed assessments of costs can be made.
  • A more forensic approach is taken collating information from various sources, running on-site reports and bringing in specialists when required.
  • A specialist has a strong knowledge of construction, refurbishments and projects and can factor this into your claim, which is an area commonly overlooked by general accountants.


Due to this more detailed approach, capital allowance advisors are able to submit much larger claims and recoup costs that can be used on innovation, exciting projects or growing the business.

Capital Allowances, and other specialist tax schemes, are a niche area of tax law, which general accountants lack the intricate knowledge of. Many accountants may obtain Capital Allowances for their clients, but they are only scratching the surface and missing out on the full benefit available.


The Impact of Not Claiming Capital Allowances

Businesses that are quickly growing, or working in a particularly competitive area, cannot afford to overlook these substantial tax savings. This oversight is more than a missed opportunity, it’s a financial misstep in an environment when every penny counts towards innovation, growth and sustainability.

Therefore, it becomes paramount for businesses to seek out and collaborate with experts who not only understand the landscape of Capital Allowances but who are also committed to leveraging every possible advantage these tax reliefs offer. In doing so, businesses position themselves to navigate the complexities of taxation not just with confidence but with the assurance of securing their maximum entitlement.


Talk to Bonham & Brook

Engagement with a Capital Allowances specialist transforms the tax process from a daunting task into a strategic endeavour.

Our team at Bonham & Brook hold the knowledge and insight to navigate the complexities of the tax system, ensuring that every eligible asset is accounted for and that your claim is optimised.

Their expertise extends to staying abreast of the latest changes in legislation, which can have a direct impact on what qualifies for relief and how it can be claimed.

A proactive approach, coupled with specialist guidance, not only illuminates the path to maximising your claim but also positions your business to leverage future tax advantages as they arise.

Contact us on 020 3523 9125 or email

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