A vast number of commercial property owners are currently sitting on huge sums of unclaimed tax relief due to a multitude of reasons. Claiming capital allowances should be on the top of the list for business owners but here are the top three reasons why many are missing out:
Thinking capital allowances is some form of tax avoidance scheme
To be clear, ITS NOT! Capital allowances is one of HMRC's flagship tax incentives designed to drive the economy forwards, with valuable tax relief becoming accessible for businesses that invest in plant and machinery. If you inspect your tax return you will note clear sections where capital allowances are to be entered and if these are blank or minimal, you're missing out.
Believing the accountants have already made the claim
This should be on the top of the list but we had to dispel the myth first.
Most business owners believe their accountants have already made a full claim for "ALL" available capital allowances, however for most, this is simply not the case. A majority of accountants will claim capital allowances on single line items with a clear value attached to the invoice, but making a claim on a commercial property is a different ball game and most accountants simply outsource this work to companies like JNC.
With complex legislation and the need to be dual qualified in both tax and surveying, expecting your accountant to have completed this type of work will prove a costly mistake.
Believing there is no plant and machinery within the property
When we talk about plant and machinery used in business most people assume we're referring to diggers, cranes and other huge pieces of kit used to rattle the core from planet Earth, However this is not the case.
When purchasing a commercial property for your business you get three parts, the land the building sits on, the structure and then all of the tax relief attracting plant and machinery. Items of plant include (but is not limited to) electrical and lighting installations, heating and ventilation systems, fire and security alarms through to kitchenettes, toilets, floor coverings and even door handles.
All of the above (and more) was inherited upon acquisition of the property and assuming the qualifying criteria set by HMRC can be met, you could be sitting on 25% plus of the property purchase price in capital allowances*.
*Average capital allowances claim is £160,000 saving £32,000 in actual tax.
Our advice to you is to make a plan to ensure your business does not fall into the trap most are currently in. Speak with your accountants, speak with us or we can speak with your accountants on your behalf to assess the state of play.
Get in touch with us via email@example.com for more information and to arrange an informal chat about your business and investment properties.