Commercial Capital Allowances Claims
On any Commercial Property there is an opportunity to claim a type of depreciation on the Plant and Machinery within it. This is called Capital Allowances, and one differentiator with this claim is that it can be written off against profit Within the business to save the payment of income tax.
The amount that can be claimed is dependent upon the use of the Commercial Property and you can see below the percentages that we would expect to be claimable:
Industrial Property 15% of the purchase price
Retail 20% of the purchase price
Pubs and Restaurants 32% of the purchase price
Offices 35% of the purchase price
Hotels 40% of the purchase price
None of these percentages are guaranteed but it just shows you what could be claimed.
Typically only the largest businesses ever bother to claim, though it would be very beneficial to any business.
There are some new laws coming into play at the following dates that you need to be aware of:
A) If you have purchased your Commercial Property before 6th April 2014 there are no changes for you and you can claim your Capital Allowances at any time.
B) If you sell your property before 6th April 2014 you don’t have to declare any plant and machinery cost in your sales pack. If you want to claim your Capital Allowances then this has to be done before the sale.
C) If you purchase your Commercial Property after 6th April 2014 then you will need to ensure that the owner has identified the plant and machinery value at that point and they will have up to 2 years to do this in. You will only have that 2 year period in which to claim your Capital Allowances on the property otherwise you will lose the right to do so completely.
D) If you sell your Commercial Property after 6th April 2014 then you will need to provide the buyer with the value of plant and machinery within 2 years of this sale whether or not you have previously claimed your Capital Allowances on the property.
For the next few months if you own a Commercial Property which you are intending to sell you can choose if you claim the Capital Allowances back for yourself before you sell, or you can just leave it to the new owner of the property to claim instead.
By doing the audit for Capital Allowances though you could considerably increase the value of the property you are selling.
So, in short If you are not intending to sell, then it’s worth looking at your Capital Allowances entitlement to see how much tax you can claim back.
If you are going to sell your property then check if it’s worth making your claim before you sell.
If you are purchasing a property make sure the owner provides you with the value of plant and machinery and then make the claim yourself within 2 years of the purchase.
If you are purchasing a property and the owner has not made a Capital Allowances claim and does not wish to provide you with the value of plant and machinery then you can do this at your own expense as you will then gain the value in claiming your tax back.
If you want to calculate the amount of Capital Allowances that could be identified then please use our calculator or we would be happy to provide you with a full illustration.
If you know someone in this situation then please refer them to us and we will be happy to pay you a referral fee. Check out our referrer programme to see the benefits to you of doing this.