Tax Relief for the Modern Workplace: Capital Allowances
December 18, 2024
Capital allowances are a form of tax relief available to UK businesses by allowing them to deduct the value of a qualifying asset from their profits before tax.
These assets include trade furniture & equipment fundamental for day-to-day operations, but also extend to the embedded plant forming part of the cost in acquiring, constructing, and refurbishing UK commercial properties.
Build Projects
The COVID-19 pandemic has compelled many businesses to adopt new ways of working, leading to significant investments in property extensions, renovations, refurbishments, and reconfigurations to align their commercial spaces with the evolving needs of the workforce.
Whilst these initiatives are often essential, they represent a significant capital outlay which many organisations find challenging to justify financially. As such, strategies to mitigate this expense are highly valued, with one effective approach being the leveraging of tax relief through capital allowances to offset the financial burden of such projects.
What can Bonham & Brook do?
We collaborate closely with clients and their accountants to ensure all eligible capital allowances are accurately identified, thus maximising tax savings. In fact, many accountants actively partner with specialists to deliver the best possible outcomes for their clients, ensuring no opportunity for savings is overlooked.
The capital allowances landscape is forever evolving and here at Bonham & Brook our team of experts comprising of analysts, technicians, consultants, and account managers guide our clients through the process every step of the way with the sole aim of ensuring their submission is thorough, robust, and compliant.
Won’t my accountant have already claimed for me?
While accountants are well-equipped to provide a high-level assessment of the project expenditures, optimising tax relief often requires the expertise of a specialist tax advisor.
Accountants will correctly identify the loose fixtures and fittings eligible for capital allowances as these items qualify in full. Typically, they will rely on receipts or invoices provided to confirm the cost of these assets.
However, the true value lies in the essentially non-structural elements intrinsic to the fabric of a building, and it is these installations for which accountants may not have the necessary knowledge or skill set required to accurately value to a standard deemed acceptable to HMRC.
It is important to emphasise though that our role is not to replace existing advisors. The job we perform is intended to complement their efforts and should not be seen as a critique of the valuable services they already provide.
We partner with accountants and this collaborative approach is why many professionals turn to us as their first choice, recognising the value of our specialised expertise rather than attempting to navigate the complexities alone.
Case Study
At the request of our client, we conducted a retrospective review of the capital improvements made to their site, alongside an analysis of their ongoing project activities. Our examination of historical tax data revealed that their accountant had done an excellent job in identifying costs eligible for capital allowances. However, we recommended that the client allow us to lead the review of current-year expenditures. This recommendation was well-received, as the accountant acknowledged the value a specialist can offer in navigating bespoke and complex projects. This is particularly pertinent when considering associated professional fees, design elements, and costs that might fall outside the scope of a standard review.
Next Steps
If you or your client have a project that could benefit from a professional review and would like to explore this opportunity further or seek clarification, please don’t hesitate to reach out to the experts at Bonham & Brook. Our specialist consultants, with over 20 years of combined experience in capital allowances, are ready to assist you in maximising your tax savings. Call us on 020 3523 9125.
