Capital Allowance – the Forgotten Tax Relief?

Hundreds of thousands of small business owners could be due a sizeable tax rebate from HMRC.

More and more commercial property owners have become aware of the tax advantages of making a capital allowances claim. A capital allowances claim may be made whether the commercial property is owned as an individual, partnership or company. Capital allowances protect profits from corporation or income tax.
Any company that owns a commercial building has a high probability of receiving a capital allowances tax windfall to the tune of maybe thousands of pounds.

Capital allowances are one of the more obscure areas of tax and for this reason they often pass under the radar of a lot of firms. For obvious reasons, the Revenue isn’t shouting about it from the rooftops, either.

To date, the average rebate generated for smaller UK commercial property owners is £25,000 net and the biggest tax rebate more than £10m net.

Ross Wyllie, Managing Director of Conation Capital Said: “Businesses of all types could be eligible — from fish and chip shop owners, dry cleaners and dentists to grocery stores and estate agents. Research confirms that in nine cases out of ten, capital allowances reports will uncover a tax rebate for the owner of a commercial property”.

“There are still tens of thousands of commercial property who have not made a claim for capital allowances because they have never been made aware that they can”.

Ross continued: “When one is presented by a tax saving initiative it is natural to want to know whether what is being proposed is legal. The answer to this, for capital allowances claims is a definite yes. Capital allowances legislation dates back to the 1870’s but the current legislation is The Capital Allowances Act 2001 which is usually amended annually by the Government of the time. Therefore capital allowances are a tax relief enshrined in statute”.

“Capital Allowances can be claimed on any expenditure which brings into existence (or improves) an asset with an enduring benefit for the trade. The purpose of capital allowances is to protect the owner’s profits from taxation and therefore reduce their tax bill. If the property has been owned for more than one financial year then a tax rebate may well be due and less tax will be paid for many years to come.

Property Aspects Magazine appreciates the expert contribution to this article from Capital Allowance consultants, Conation Capital.