Commercial property tax relief
What are capital allowances?
When you buy, build or refurbish commercial property, much of the cost is plant and machinery. The Capital Allowances Act 2001 lets you deduct it from taxable profits. Here’s how it works and how we claim it.
Relief for what stays in the building
You can’t deduct the cost of a property through your profit and loss account. But part of that cost is lifts, heating, plumbing, air conditioning, three-phase electrics, kitchens, bathrooms, doors and suspended ceilings. A useful test: anything that would stay put if you tipped the building upside down.
Those items qualify for capital allowances whether you installed them or inherited them when you bought the property. The relief can be as much as 40% of a property’s cost, and more for alterations, extensions and refurbishments. If the spend was in the last two years, much of it may be available immediately.
Capital allowances arise on:
- the purchase of an existing or newly built property
- construction of a new property
- alterations, extensions and refurbishment
- the fit-out of let property
They replace accounting depreciation in your tax computation, and can be claimed through an amended or current return to reduce taxable profit or generate a refund. They are optional but must be claimed, and the rules decide who gets relief, for what, when and how. That is why the valuation needs specialists.
Our methodology
How an HMA claim works
Every claim is prepared by a surveyor and a chartered tax specialist working together.
Initial review
We review the property details, confirm it qualifies and estimate the relief available.
Property survey
One of our surveyors visits to identify embedded items. They work around your business.
Survey Review Form
You review our findings, with a full register of eligible items, and tell us what’s been claimed before.
Tax specialists
Chartered tax specialists prepare a detailed report for approval and make sure it’s submitted correctly.
HMRC submission
We have a 100% approval rate on reports submitted to HMRC.
Tax relief
Review and approval typically takes three to four weeks. The relief then reduces your tax bill, or is repaid where tax has already been paid.
Do I qualify?
Three questions decide it
- Do you own UK commercial property? Almost any type, as long as a claim hasn’t already been made.
- Do you pay UK tax? The owner must be paying UK income tax or corporation tax.
- Is it held in a pension fund? Pension-held property can’t claim. Buying from a pension fund is a different story: talk to us first.
Common questions
Before you ask
Why hasn’t my accountant claimed this already?
Embedded allowances need a property survey, a valuation and specialist tax knowledge. Most accountancy firms claim invoiced items such as furniture and computers, but don’t have the surveying resource to identify fixtures built into the fabric of a building.
Does a claim affect Capital Gains Tax?
Allowances are not deducted from the cost of the asset when calculating a gain (s41 TCGA 1992), so a claim cannot create or increase a chargeable gain. They can restrict a capital loss, and on a sale the s198 election decides what passes to the buyer, so plan it into the transaction.
What if HMRC questions my claim?
Every claim is documented to stand up to scrutiny, and we support you throughout any HMRC enquiry. To date every report we have submitted has been approved.
Are there any hidden costs?
No. If we can’t identify previously unclaimed allowances, there is no fee. Full fee terms are set out in our engagement letter.
Find out what your property is worth in tax relief
Two minutes, no obligation, and no fee if we can’t identify previously unclaimed allowances.