Taking advantage of capital allowances, companies can claim tax relief on fittings such as air conditioning, radiators, pipework, cabling, lighting and security systems – anything relating to the intrinsic fabric of the building – even if the property was bought a decade ago, according to Tony Smith, CEO at Conation Capital.
But while accountants routinely claim on everyday purchases such as curtains, carpets, fire extinguishers and radiator covers, they often fail to claim on other, less-easy-to-spot fittings.
Conation Capital advises that without receipts, a detailed analysis is needed to ascertain the correct value of the qualifying assets within the property. Also, companies can only claim for an item once and need to check that a claim has not been made before. Conation Capital conducts forensic surveys to draw up a list of all the fittings in every room, including hidden cabling, and then feed it into a computer model.
Smith said “The sheer scale of legislation” to battle with, was putting many smaller firms off. “In most cases, a business doesn’t claim as much as they could claim, and there are still many businesses who don’t claim at all … it could be billions of pounds”.
There are about 1.4m commercial properties in England and Wales, according to government figures, ranging from fish and chip shops to the Gherkin. On a typical £1m property, a Capital Allowance specialist would typically find £200,000 of unused capital allowances. As for a typical SME with a commercial property, it could save about £25,000.
Capital allowances on commercial property have always been a bit of a “dirty secret” since being introduced in the UK after the Second World War. The government had considered getting rid of them altogether, but agreed to the new rules after industry lobbying, amid fears that companies might relocate to other places with capital allowances, such as the US, France, Germany or eastern Europe.
If you need help to calculate whether you could qualify for a property tax rebate, contact Conation Capital directly on 03000 30 99 00
Property Aspects appreciates the contribution to this article from the team at Conation Capital.