Capital Allowances

Tax Relief for UK Commercial Property Owners

Capital allowances are a form of tax relief for expenditure incurred on commercial property acquisition, builds and refurbishments. It is available for commercial property investors and UK business owners.

What are Capital Allowances?

Capital allowances are a form of tax relief given on costs incurred on commercial property acquisition, builds and refurbishments, and is available for commercial property investors and UK business owners. They allow you to claim a portion of their cost against your tax liability, either creating a tax rebate or a tax reduction. Tax relief can range between 5% and 60% of the cost, depending on the nature of the expenditure.

Who can claim Capital Allowances?

In short, any UK commercial property owner, whether it be a limited company, partnership or individual can claim Capital allowances on commercial property.

Providing you are paying corporation tax, or income tax, and have a qualifying interest in the property then it’s likely you will be able to benefit from Capital allowances tax relief.


When Can Capital Allowances Be Claimed?

There’s no time limit on claiming capital allowances, providing the asset is still owned and used within the qualifying commercial activity. Capital allowances are not given automatically; they must be claimed in a tax return.

It is important to review historical expenditures, as capital allowances can often be missed. Here at Bonham and Brook we can help identify and maximise potential savings.

What is plant and machinery for the purposes of capital allowances?

Whether an item qualifies must be determined by reference to the facts, the nature of the trade, and the function of the item in the trade. A number of conditions / tests must be satisfied. Assets that can often be classed as ‘plant and machinery’ are equipment like computers, office furniture, tools, machinery, etc, i.e. items that you use to keep your business running.

Items of plant and machinery include:

  • The costs associated with demolishing plant and machinery equipment.
  • Some fitted fixtures and fittings e.g., fitted kitchens, washroom facilities, and CCTV systems.
  • Alterations to a building to install plant and machinery equipment.
  • Integral features (see below for more on these)

What are integral features?

This plant and machinery only became eligible to be claimed upon in April 2008, integral features include;

  • lifts, escalators and moving walkways
  • space and water heating systems
  • air-conditioning and air-cooling systems
  • hot and cold-water systems (but not toilet and kitchen facilities)
  • electrical systems, including lighting systems
  • external solar shading

Our Capital Allowances process

At Bonham & Brook, our process for claiming capital allowances involves the following steps:

  • Technical analysis
    Our tax experts will carry out a thorough analysis of your properties; assessing all purchases, as well as any build and refurbishment projects that are ongoing or have already been completed.
  • Site survey
    If required, we will carry out a survey of the property. There are some instances where a survey might not be required, i.e., due to having an itemised cost breakdown.
  • Report preparation
    Preparing a capital allowances claim requires in-depth knowledge of tax legislation and regulations. We provide a HMRC compliant report; so, you have peace of mind that your claim will stand up to HMRC scrutiny.
  • Ongoing support
    At Bonham and Brook, we function as an integral part of your team, ready to assist you at all times. Our expertise lies in guiding you through the intricacies of Capital Allowances legislation, providing the support needed to make well-informed decisions for the benefit of your business.

What reliefs are available?

  • Writing down allowances
  • Annual Investment Allowance
  • Super deduction
  • Full expensing
  • Structures and buildings allowances
  • First Years Allowance

Get in touch today to find out more