At HMA Tax, we understand the intricacies of Embedded Capital Allowances (ECAs) and the significant tax relief they can offer to commercial property owners across the United Kingdom. ECAs can uncover substantial financial benefits within your property, but navigating the eligibility criteria requires expertise. Here’s everything you need to know to determine if you can make an ECA claim for your commercial property.
What are Embedded Capital Allowances?
Embedded Capital Allowances refer to tax reliefs on fixed, integral features within your commercial property. These can include but are not limited to electrical systems, heating and cooling systems, and security systems – essentially, the non-moveable elements that are crucial to the functionality of the property.
Eligibility Criteria for Making an ECA Claim
To qualify for an Embedded Capital Allowance claim, your situation must meet the following criteria:
- Commercial Property Ownership: The claimant must be the owner of the commercial property, either as an individual, a company, or part of a partnership. Residential properties are excluded, with specific exceptions for furnished holiday lettings.
- Taxable Profit Generation: The claimant must be generating taxable profits, as ECAs are used to offset these profits, reducing the overall tax liability.
- Utilisation of Embedded Features: The integral features for which allowances are claimed must be in use for the business. The allowances are not applicable for features not in use or for personal use.
- Ownership or Leasehold Improvements: Both owners and certain leaseholders can claim ECAs. Leaseholders must have incurred expenditure on qualifying features, with certain lease conditions applying.
Identifying Qualifying Expenditure
Identifying and quantifying qualifying expenditure is a complex process that involves a detailed analysis of the property’s construction costs, including direct costs and an apportionment of indirect costs. It requires the expertise of a specialist to ensure that all qualifying items are correctly identified and claimed.
Making Your Claim
To make an ECA claim, you must:
- Conduct a Survey: A detailed survey by a qualified professional is necessary to identify all embedded items eligible for allowances. We have a team of experienced Surveyors who will visit your property and assess what can be claimed.
- Calculate Allowances: The identified items must be valued, and the allowances calculated according to current legislation.
- Submit Your Claim: The claim is submitted as part of your corporation tax return for companies or through the self-assessment tax return for individuals and partnerships.
Why Choose HMA Tax?
At HMA Tax, our specialists have years of experience in identifying and processing over £500 million of Embedded Capital Allowances for a wide range of commercial properties. We offer comprehensive support, from initial assessment through to claim submission, ensuring you maximise your entitlement while complying with all HMRC requirements.