Capital Allowances - FAQ
The directors of James Nazir & Co have a combined 30+ years experience in taxation but more specifically within the niche area of Capital Allowances.
Most business owners/investors have never heard of this opportunity but those that have are benefiting from thousands of pounds in tax free income each and every year.
Below we have listed the frequently asked question in relation to capital allowances in order to enhance your knowledge and understanding of this somewhat misunderstood subject.
Q) Can Capital Allowances be claimed on existing commercial properties?
A) Yes, we do this by using HMRC Section 562 Apportionment formula. On average we see in the region of 25% of the purchase price back in capital allowances i.e TAX FREE INCOME!
Q) Can Capital Allowances be claimed on the refurbishment of a office?
A) Yes. Capital Allowances can be claimed on the refurbishment of any commercial property. The amount of capital allowances will vary from project to project depending on the amount of structural works.
Q) What attracts Capital Allowances within a commercial property?
A) Items within a commercial property that attract Capital Allowances are known as "plant" under the CAA2001, Section 23, List C.
Items of "plant" include heating and ventilation installations, lighting and general power systems, fire and security alarms, data and telecoms systems, carpets, ironmongery, lifts, incoming mains (water, gas, electric) right through to kitchen cabinets, toilets and everything in-between.
Q) Can i claim Capital Allowances on my BTL property?
A) No, Capital Allowances can not be claimed on residential properties. Legislation prevents landlords claiming capital allowances within a dwelling house. This includes student lets and cluster flats.
Q) I am a property developer, can i claim Capital Allowances?
A) No. In order to claim Capital Allowances you need to hold the asset as an investment. Property developers hold the property as stock in trade so if you plan to buy, refurbish and "flip" the property, no claim can be made.
Q) Does my apartment complex hold Capital Allowances?
A) Yes. Unlike residential dwelling houses an apartment complex will have embedded Capital Allowances within the communal areas of the building. Reception areas, hallways and stairwells as well as lifts will all qualify within a communal claim and could equate to 10% of the purchase price in Capital Allowances i.e TAX FREE INCOME!
Q) I purchased my commercial property within a pension fund, can i claim?
A) No. Pension funds, property developers, charities and local authorities do not qualify to claim Capital Allowances as they are not subject to tax applicable to claim Capital Allowances.
Q) Can i get a tax refund by completing a Capital Allowances exercise?
A) If you have owned a qualifying property for two tax years or more, and paid the tax due, then you could be entitled to a tax refund from HMRC. As standard, a tax return can be amended up to 12 months after its filing deadline and the figure we identify would be input into that tax return to generate the tax refund.
Q) What happens if HMRC enquire in to the figures within the Capital Allowances report?
A) James Nazir & Co take full liability for the figures within the reports it produces and will reply to HMRC on behalf of the client. James Nazir & Co have a sterling relationship with HMRC and in the unlikely event of a query, we will resolve it swiftly with them.
There are plenty of question in relation to capital allowances and each case is different and based on its merits.
If you have any queries that we have not covered above then please feel free to drop us a line on 0843 0059711 or email us at firstname.lastname@example.org.