The latest rule change imposed on Capital Allowances has taken effect and will impact anyone who buys or sells a Commercial Property on or after 1st April 2014 for corporate tax payers and 6th April 2014 for income tax payers.
Any property purchased after these dates will be subject to a Section 198 or 199 Election. These elections are designed to fix the value of plant and machinery within the property in order to curb double claims being made by both vendors and purchasers and have been around for many years. If a Section 198 or 199 Election is not entered into by the vendor and purchaser within a two year period after completion then the purchaser losses the right to claim Capital Allowances on historic plant and these are lost forever.
There are exceptions to these rules whereby the prior owners (who owned the property since pre April 2014) were not entitled to claim Capital Allowances, for instance, the property was held within a pension fund, owned by a Charity or has recently been constructed by a developer. In these scenarios the purchaser is unrestricted and can claim Capital Allowances without the need for either type of election being entered into.
There has never been a better time to invest in Commercial Property but with the current legislation being extremely stringent, the need to employ a Capital Allowances Specialist has never been more important. It is also advised that before you complete on a future Commercial Property transaction you speak with your accountants and solicitors regarding this subject which will become more prominent and in the spot light over the coming years.