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  • Award Winning Capital Allowance Specialists

Property Developer’s tax planning

Capital Allowances continue to be an essential part of Property Developer’s tax planning.

With 2020 firmly behind us, we look ahead to 2021, which we expect to be our most exciting and busiest year to date. 

Amidst the pandemic, HMRC has helped businesses by allowing deferral of payments for VAT. However, corporation and income tax are still due as normal and can be of significant cost to businesses and individuals. Our award-winning team of capital allowance specialists are able to assist you to reduce your tax liabilities. 

Everyone likes to think they are on top of their tax planning, but for commercial property owners, capital allowance reviews on their buildings are often unknown or overlooked.

In 2020, HMA Tax carried out over 800 claims generating more than £120m of tax relief for our clients, helping them and their businesses to generate positive cashflow injections. Here is a recent example;

Care home purchased:                     £2,000,000 

Capital allowances:                           £800,000

Corporation tax saving:                 £152,000

From this corporation tax saving, taxpayers are able to receive a cash rebate from HMRC subject to their tax position, as well as relief going forward. The exact breakdown is modelled by our experts and the vast majority of the benefit is seen over the first years.

Property Improvements

As we expand, we are seeing more clients approaching us who are either currently or about to carry out significant development expenditure on fit outs, refurbishments and new buildings. In these instances, the allowances can be substantial. For new commercial properties, the qualifying expenditure is typically 40% rising up to 90% for refurbishments. A recent example is as follows:

Office purchased:                                                      £2,000,000

Refurbishment and Development costs:                 £5,000,000

Capital allowances identified:                                  £4,000,000

Corporation tax saving:                                         £760,000                                            

The great news for commercial property owners is that the government has extended the Annual Investment Allowances (AIA) limit of £1,000,000 for 2021. The AIA allows property owners to claim 100% tax relief on the first £1,000,000 of capital allowances identified in the first year.

To date we have made over 3,150 claims for our clients and we would like you to be one of them. Please contact me using the details below and I would be happy to give you a free estimate of the tax savings we can generate for your business. 

Author: Duncan Chittick

Director