Property Taxation - Capital Allowances
What are Capital Allowances?
They are a most valuable tax relief available on qualifying expenditure on buildings, plant and machinery used in the course of trade. They are available to all taxpayers to be set off against taxable profits.
The Allowances available from 1st April 2008 are:
Plant and machinery - 20% p.a. on a reducing balance basis.
Integral Features - 10% p.a. on a reducing balance basis
Long life assets - 10% p.a. on a reducing balance basis
Industrial/Agricultural buildings & Hotel buildings - 3% p.a. on a straight line basis and reducing by 1 % p.a. to nil over the next three years.
There is an Annual Investment Allowance of 100% for the first £50,000 qualifying expenditure available to all taxpayers.
Special categories: Research and Development, Energy Saving Expenditure, Flats over shops, Cleaning up Contaminated Land, Business Premises Renovation Allowance
What is Plant and Machinery?
To qualify as plant, a piece of equipment/machinery must perform a function in a business, and not be part of the premises. The nature of the trade has to be considered, as not every item will necessarily be applicable to every business. Some examples that qualify under integral features are heating and air-conditioning installations, lifts, cold water systems, electrical systems and external solar shading. Other items like sanitary fittings, carpets, fire protection, communication systems and furniture falling into the plant and machinery section.
Who can claim Capital Allowances?
• The claimant must own the plant and machinery
• must have paid for it
• it must be for the purpose of a trade
• the claimant must be a taxpayer or subject to tax.
Capital Allowances are also available to overseas investors trading in the UK and subject to UK tax.
Who cannot claim?
Non-taxpayers, i.e. pension funds, charities, trusts, local authorities. Not property traders as their expenditure is stock-in-trade and not capital expenditure.
When can claims be made?
On new and newly equipped buildings. On refurbishments and alterations to existing buildings. On purchased buildings.
Potential tax benefit
Capital Allowances can have a most significant impact on investment in property. The percentage of plant and machinery will vary according to the type and quality of the property, creating savings of 6% to15%.
Inland Revenue requirement
It is vitally important that Capital Allowance claims are not only fully documented and maximised, but that they also comply with the ever-changing and often imprecise tax legislation. It is therefore highly advisable to engage qualified specialists in these matters to plan and prepare capital allowance claim certificates to support tax returns to the Inland Revenue.
Pro-active approach
Turpin Barker Armstrong has chartered surveyors with specialist tax training and experience and, together with their own in-house tax skills, the two professions work in tandem to maximise capital allowance claims.
A pro-active and creative approach is always taken in analysing clients' situations, charting the best course and establishing their rights with the tax authorities. The very broad expertise available through Turpin Barker Armstrong ensures high quality practical advice and guarantees fast results and effective implementation
The System we use ensures even the most complex situations are rigorously and comprehensively evaluated and maximised. This System generally produces considerable tax savings for clients, well above the sector norm.
Why Turpin Barker Annstrong?
The strengths and advantages of using our specialised services are:
• a one-stop service to control and manage the preparation and agreement of claims
• cost-effective preparation, negotiation and agreement of claims
• specialist legal and tax knowledge
• excellent working relationship with the Inland Revenue and the Valuation Office with whom we
have achieved a high success rate
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